Oil Updates — crude prices inch up as output cut decisions cloud the market

Oil Updates — crude prices inch up as output cut decisions cloud the market
Brent crude futures dipped 21 cents, or 0.3 percent, to $76.44 a barrel at 09:50 a.m. Saudi time (Shutterstock)
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Updated 06 July 2023

Oil Updates — crude prices inch up as output cut decisions cloud the market

Oil Updates — crude prices inch up as output cut decisions cloud the market

RIYADH: Oil prices went up on Thursday, primarily supported by the output cuts announced by Saudi Arabia and Russia earlier this week.

Brent crude futures edged up 22 cents to $76.87 a barrel at 2:30 p.m. Saudi time, while US West Texas Intermediate crude also went up by 31 cents to $72.10.

Saudi Arabia, the world’s biggest crude exporter, said on Monday it would extend its voluntary output cut of 1 million barrels daily to August.

Russia and Algeria volunteered to lower their August output and export levels by 500,000 bpd and 20,000 bpd, respectively.

UAE’s Al-Jaber urges oil and gas industry to step up its climate game 

The UAE’s incoming COP28 president urged the oil and gas industry on Thursday to “step up its game” toward building a clean energy system. 

Oil and gas firms need to achieve net-zero emissions by or before 2050 while an industrywide commitment to reach near-zero methane emissions by 2030 needs to be accelerated, Sultan Ahmed Al-Jaber told the Organization of the Petroleum Exporting Countries’ International Seminar in Vienna.  

“The phase down of fossil fuels is inevitable. It is in fact essential. But it cannot be irresponsible,” he added. 

Al-Jaber called for an inclusive summit that brings together all stakeholders including the fossil fuel industry. 

“The critical challenge of this century is to dramatically reduce emissions, while maintaining robust sustainable development,” he said. “That is why I am so focused on COP28 being truly inclusive.” 

Four new countries consulted to join OPEC: sec-gen 

OPEC Secretary-General Haitham Al-Ghais told Emirates News Agency on Wednesday that there are discussions with four new countries — Azerbaijan, Malaysia, Brunei and Mexico — to join the organization. 

“Consultations with new countries from outside the organization contribute to strengthening the cohesion of OPEC,” Al-Ghais added. 

Kuwait to have higher oil production quota as it ramps up capacity: minister 

Kuwait’s oil minister said that his country hopes to have a higher oil production quota when it ramps up capacity, and that Kuwait remains committed to OPEC decisions. 

Saad Al-Barrak said his country hopes to reach 3.2 million barrels per day of production capacity before the end of 2024. The hope for a higher OPEC quota was not urgent, he told reporters. 

“We are committed to agreements with OPEC,” the minister told reporters.  

He added: “We are talking depending on the market, depending on many things.”  

(With input from Reuters)

Oil Updates – crude set for 2% weekly gain on China holiday demand, tight US supply

Oil Updates – crude set for 2% weekly gain on China holiday demand, tight US supply
Updated 11 sec ago

Oil Updates – crude set for 2% weekly gain on China holiday demand, tight US supply

Oil Updates – crude set for 2% weekly gain on China holiday demand, tight US supply

LONDON: Oil prices were set for a weekly gain of around 2 percent after regaining ground on Friday amid strong holiday demand from China and persistently tight US fundamentals.

Brent November futures which expire on Friday rose 5 cents to $95.43 per barrel. Brent December futures gained 13 cents to trade at $93.23 per barrel at 6:35 a.m. GMT.

US West Texas Intermediate crude climbed 16 cents to $91.87 per barrel.

The market eased about 1 percent in the previous session, as traders took profits after prices soared to 10-month highs, and some worried that high interest rates may weigh on oil demand.

Improving macroeconomic data from China, the world’s largest oil importer, coupled with strong fuel demand as the country as it embarked on its week-long Golden Week holiday on Friday, supported prices.

“(An) increase in international travel during the Golden Week holiday is boosting Chinese oil demand,” ANZ analysts said in a client note.

Domestic travel is also expected to boost demand, with data from flight app Umetrip showing the average number of daily flights booked is a fifth higher than for Golden Week in 2019, before the COVID-19 outbreak.

China’s factory activity likely steadied in September, a Reuters poll showed, adding to a run of indicators suggesting the world’s second-largest economy has begun to stabilize which could bolster demand further. Official data is due on Saturday.

The US economy maintained a fairly solid pace of growth in the second quarter and activity appears to have accelerated this quarter, data showed on Thursday, indicating that strong fuel demand could remain.

A backdrop of tight supplies in the US provided further price support, with storage at Cushing, Oklahoma, the delivery point for the country’s crude futures, already at their lowest since July 2022.

Traders are awaiting next week’s meeting of the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, scheduled for Oct. 4.

“Next week’s OPEC meeting will be a key update for the market with increasing probability the voluntary supply cuts by Aramco are reduced,” said National Australia Bank analysts in a client note. 

‘Place the burden’ on wealthy segments of society, IMF tells Pakistan

‘Place the burden’ on wealthy segments of society, IMF tells Pakistan
Updated 23 min 3 sec ago

‘Place the burden’ on wealthy segments of society, IMF tells Pakistan

‘Place the burden’ on wealthy segments of society, IMF tells Pakistan
  • Pakistan and IMF struck $3 billion bailout deal earlier this year
  • Reforms linked to bailout have already fueled annual inflation

KARACHI: Pakistan needs to “place the burden” on wealthy segments of society and ensure that the rich pay taxes and the poor are protected, an IMF spokeswoman said in a press briefing on Thursday.

The International Monetary Fund and Pakistan struck a staff-level agreement for the provision on $3 billion in bailout funds under a stand-by arrangement (SBA) earlier this year, giving the South Asian economy a much-awaited respite as it teetered on the brink of default.

Reforms linked to the bailout, including an easing of import restrictions and a demand that subsidies be removed, have already fueled annual inflation, which rose to a record 38.0 percent in May. Interest rates have also risen, and the rupee hit all-time lows. Last month the currency fell 6.2 percent though it has sharply recovered in September amid a crackdown on illegal foreign exchange trade in grey and black markets by security agencies.

The August data from Pakistan’s statistics bureau showed a slight easing from July’s 28.3 percent inflation rate, but food inflation remained elevated at 38.5 percent.

“Place the burden on the wealthy segments of society. It’s important … that the rich pay their taxes, tax to GDP ratio in Pakistan is very, very low and that the poor are protected in society. The poor and the vulnerable members of society are protected,” IMF spokeswoman Julie Kozack told reporters in Washington, when asked about IMF reforms linked to the bailout.

She said the objectives of the program were to “provide a policy anchor” to Pakistan to address domestic and external imbalances and a framework for financial support from other donors, multilateral and bilateral partners, including fresh financing and rollovers of debt coming due.

“Policy efforts center on the implementation of the fiscal year 2024 budget, appropriate monetary policy aimed at bringing inflation down, and continued reforms to improve the viability of the energy sector,” Kozack said.

“All of these reforms are ultimately aimed at paving the way for higher, more inclusive and more resilient growth. To support social development and climate resilience, the program envisages plans to strengthen public financial management, tax administration efforts, and to better prioritize public investment. And all of this is being done with support from partners including not only the IMF but also the World Bank and the Asian Development Bank.”

FX clampdown boosts Pakistani rupee 6.1 percent to become September’s top currency

FX clampdown boosts Pakistani rupee 6.1 percent to become September’s top currency
Updated 29 min 39 sec ago

FX clampdown boosts Pakistani rupee 6.1 percent to become September’s top currency

FX clampdown boosts Pakistani rupee 6.1 percent to become September’s top currency
  • September’s gains have almost made up for all of the rupee’s losses in August
  • Gains technically make rupee the best-performing currency in the world this month

KARACHI: Pakistan’s rupee has gained 6.1 percent against the dollar so far in September, following an official clampdown on illegal foreign exchange trade in grey and black markets by security agencies.

September’s gains have almost made up for all of the rupee’s losses in August and technically make it the best-performing currency in the world this month. The rupee hit a record low of 307.1 against the dollar on Sept. 5 but has made a sharp recovery since the country’s financial regulator and security agencies began taking action the next day to curb black market operations.

The Pakistani rupee closed 0.3 percent up in the interbank market at 287.8 per dollar on Thursday.

The crackdown on black market operators against the informal market resulted in tens of millions of dollars pouring back into Pakistan’s interbank and open markets, dealers said.

“The government’s stern administrative action against the unlawful foreign exchange dealers and hoarders in commodity markets is stabilizing the exchange rate, providing a respite to the imported inflation and easing out commodity prices,” the Finance Ministry said in its monthly report.

“The rupee has indeed performed well but this data does not reflect the sharp depreciation preceding this performance. Pakistan’s currency has been one of the worst-performing in recent years,” said Fahad Rauf, Head of Research at Ismail Iqbal Securities.

A market-determined exchange rate is a key condition for Pakistan receiving a $3 billion bailout loan from the International Monetary Fund (IMF) that was agreed in July to help avert a sovereign default.

Rauf added that the recent performance of the rupee is more of a recovery than an actual out-performance. He said the reserves situation is still far from comfortable.

On Thursday, Pakistan’s reserves clocked in at $7.637 billion, enough for less than two months’ worth of imports.

The report added that inflation is anticipated to remain high in the coming month, hovering around 29-31 percent due to an upward adjustment in energy tariffs and a major increase in fuel prices.

Lucid marks green milestone as it opens first global facility in Jeddah

Lucid marks green milestone as it opens first global facility in Jeddah
Updated 28 September 2023

Lucid marks green milestone as it opens first global facility in Jeddah

Lucid marks green milestone as it opens first global facility in Jeddah

JEDDAH: Lucid Group celebrated the official opening of its first international car manufacturing facility in Saudi Arabia on Wednesday. Situated in King Abdullah Economic City, the new facility is not only poised to serve the local market but also has its sights set on future exports. 

In an interview with Arab News, Faisal Sultan, vice president and managing director for Middle East at Lucid Group, noted that the facility’s opening marks the start of their production operations and positions them to fulfill their recently signed agreement with the Saudi government.

The agreement involves purchasing up to 100,000 vehicles over a decade, with an initial commitment of 50,000 vehicles and an option for an additional 50,000 over the same period. 

Speaking about why Lucid ventured into electric car manufacturing in a country with a strong oil-based economy, Sultan said that Saudi Arabia was chosen for its strategic location and the ongoing transformative changes taking place within the country. 

“With Vision 2030, Saudi Arabia is transforming from only oil dependency and going into industries, tourism, healthcare, IT, and AI. So, those things all resonate with our policy. We are also in the business of transforming the mode of transportation, the luxury aspects, and trying to get customers to contribute to our sustainability,” he said.   

Sultan added that sustainability is the core policy of Vision 2030. “That was the main reason, but the other reason is the strategic location of KAEC, being on the Red Sea, giving us the opportunity to manufacture cars here, not just for local markets, but in the future to export them out through the Red Sea,” he explained.   

Held at KAEC, the inauguration event had some high-profile participants including Minister of Investment Khalid Al-Falih, Minister of Industry and Mineral Resources Bandar Alkhorayef, and Governor of the Kingdom’s Public Investment Fund Yasir Al-Rumayyan, along with the US Ambassador to the Kingdom, Michael Alan Ratney, and Lucid Group leadership. 

Aligning with green initiative 

Al-Falih highlighted that Lucid Motors’ establishment aligns with Saudi Arabia’s Vision 2030, the Saudi Green Initiative, and the country’s commitment to sustainability and net-zero emissions.  

He noted the global shift towards electric vehicles, emphasizing the importance of preserving the environment. 

“Off all cars sold globally last year, EVs saw a 65 percent increase year on year, compared to a 7 percent decline for internal combustion engine cars. This rapid growth in EV sales is a testament to humanity’s dedication to preserving our planet and ensuring a safer, healthier future for generations to come,” Al-Falih said.   

Furthermore, he added, through the inauguration of this facility, Saudi Arabia sends a message to the world, affirming its commitment to fostering innovation, investing in groundbreaking technologies, and spearheading environmentally sustainable advancements. 

This commitment extends beyond KAEC to NEOM, home to the world’s largest green hydrogen project, and Red Sea Global, where the first off-grid, all-renewable energy system will power operations. 

“We are laying the foundation for a future that prioritizes environmental consciousness right here in our own land,” the minister further added.   

Meanwhile, Sultan recalled Saudi Arabia’s announcement of the SGI, aimed at ensuring that 30 percent of cars sold in the country are EVs, underlining the nation’s belief in the global necessity for such a shift. 

He observed that there is a significant global shift as consumers increasingly embrace electric vehicles.  

“I think for Saudi Arabia to take that bold step and to also start putting the infrastructure and the companies like Lucid being present within the country producing cars will definitely help achieve those goals for the country and also help us create the demand that is really needed to get the electric vehicles on the road,” he said.  

Sultan added that a greater presence of electric vehicles on the road would unquestionably lead to reduced emissions, cleaner air, and a healthier environment for future generations. 

Manufacturing hub 

Al-Falih affirmed that this step would position the Kingdom as a regional manufacturing hub for the broader green economy. He added that Lucid’s presence would serve as a nucleus, unlocking the value chain of the EV industry and giving rise to spin-off effects and additional investment opportunities.   

Lucid’s presence in Saudi Arabia is expected to generate over 4,000 direct jobs, potential exports exceeding $117 billion, and a gross domestic product impact of nearly $50 billion.  

The facility aims to promote homegrown Saudi talent and provide expert skill development training. The company also highlighted that, through an agreement with the Human Resources Development Fund, it anticipates employing hundreds of Saudi nationals in the initial years and ultimately expanding the workforce into the thousands. 

For his part, Alkhorayef said in his speech: “We are quite determined to a complete cluster that will help different downstream and upstream industries, downstream chemical, and metals. We are also resolved to allow Saudi Arabia to become a global player in EVs, batteries, and so on.”   

He added that they are working very closely with Lucid, Ceer, and PIF to ensure Saudi Arabia becomes a hub of innovation.   

The industry minister also underscored that the occasion signifies not only the establishment of the facility but also a demonstration of the genuinely favorable investment environment in Saudi Arabia. 

In his speech, Ratney stated: “This partnership will deliver the world’s most advanced electric vehicles to a global market. It will inspire increased adoption of electric vehicle technologies globally and contribute to the development of the Kingdom’s own human capital.” 

He also emphasized that the timing is perfect for such a partnership, noting, “In fact, Lucid estimates that the first manufacturing plant in Saudi Arabia could generate $3.4 billion in value over the next 15 years, aligning Saudi investment and talent with US engineering, R&D, and manufacturing.” 

Charging stations  

Saudi Arabia is also investing in building a robust charging infrastructure for electric vehicles, with Lucid providing technical knowledge and support for smart charging infrastructure. 

Sultan said that Lucid itself provides its customers with a charger for their home that can actually charge the vehicle within a few hours.   

“But it is only when you are traveling from one city, like Riyadh to Jeddah, you will need to have the public infrastructure charging. So, we want to make sure that our customers have that through the discussions that we have with the government entities and the private sector,” he explained.   

The Lucid executive revealed that they have plans to export outside Saudi Arabia once their facility is fully operational.   

He stated that their strategy had been to export vehicles from Saudi Arabia upon reaching full capacity at manufacturing plant AMP-2, aiming to assemble 150,000 mid-sized platform vehicles.

Sultan mentioned technological partnerships, such as the one with Aston Martin, as part of Lucid’s long-term vision for electric mobility in Saudi Arabia.   

“We will continue to look for deals like that. I think Lucid technology is something that is very far advanced than some of our competitors. And we want to make sure that this technology is used for the greater humankind’s betterment,” he said.  

Sultan added that their goal is to increase the production of EVs and contribute wherever possible, be it through their own vehicles or technology partnerships, to get more electric cars on the road. 

He concluded by stating that they have already assembled about 51 cars in the new facility and are “ready" for further production. Sultan noted that their current annual production capacity at the assembly plant is 5,000 vehicles, but this capacity will significantly increase once the full complex in Jeddah is completed, reaching a total of 155,000 vehicles. 

Economic durability key to environmental sustainability, Saudi minister tells UN World Tourism Day gathering

Economic durability key to environmental sustainability, Saudi minister tells UN World Tourism Day gathering
Updated 28 September 2023

Economic durability key to environmental sustainability, Saudi minister tells UN World Tourism Day gathering

Economic durability key to environmental sustainability, Saudi minister tells UN World Tourism Day gathering

RIYADH: Environmental sustainability can only be delivered if a country has a strong and stable economy, stated the Saudi minister of investment during a panel discussion at the UN World Tourism Day 2023 event in Riyadh. 

Khalid Al-Falih stressed that his role as minister entails ensuring financial agreements are closely connected to environmentally friendly practices. 

This means investments made “in the fuel of the future” in smart cities and mobility are sustainable, he said, adding that they should “give the tourists a sense of comfort that they are undertaking a journey, a vacation, a holiday and along the way they are benefiting the environment and not harming it.”

He stated that the tourism sector is undergoing a significant definition and development process in the Kingdom, emphasizing that this is relevant to the region and the broader Middle East. 

“With the leadership of (UN World Tourism Organization) Secretary General Zurab (Pololikashvili), Saudi Arabia is helping define the future of tourism in a sustainable way,” Al-Falih noted. 

He added: “It is important that tourism becomes counter and actually helps through the connectivity that we create between institutions, technologies and people.”

These connections are expected to be crucial in promoting eco-friendly practices and outcomes. 

During a roundtable, Pololikashvili discussed the dynamic changes in the Kingdom’s investments, infrastructures, and regulations, opening new opportunities, especially in hosting international events. 

“The country was totally closed to international travelers, and now here you see people coming from Argentina, Chile, Japan, and from all over the world. Almost 20 African ministers are here,” Pololikashvili said. 

He continued: “Nobody could imagine (this) five years ago. So, these are the steps. There’s a longer vision. It’s not only the year 2030. Many more things will happen here.” 

Pololikashvili emphasized that the government and the minister of tourism are striving to increase the number of international visitors, making it their top priority.

Citing data from the International Air Transport Association, Gloria Guevara Manzo, chief special adviser at the Saudi Ministry of Tourism, stated that the Kingdom had 4.5 billion passengers before the pandemic.

“This year, we are going to achieve 94 percent of that, and the reality is going to double,” Manzo continued. 

However, she added: “For that, you need to have the technology, and for that you need to have the cooperation of the government and of course the private sector.” 

Furthermore, in alignment with Vision 2030 objectives, the nation is undergoing a remarkable transformation towards openness, diversity, and sustainability, stated Basmah Al-Mayman,  Middle East regional director at the UNWTO, in an interview with Arab News on the sidelines of the event. 

Al-Mayman noted that this goal serves as a model of inspiration to the world. 

However, she told Arab News: “One main challenge that was facing the tourism sector in the Kingdom was the women working in the sector in our conservative society.” 

Al-Mayman added: “Nowadays, the situation has changed a lot as women have become more visible in the workforce and community, contributing more to the economy and development of the Kingdom. This is creating an outstanding shift in attitudes and behavior that will appeal on an international stage.” 

Moreover, the UN official underscored the importance of establishing a robust institutional framework for the tourism sector through a close collaboration between the public and private sectors. 

This involves creating regulations that define the roles and responsibilities of the private sector within the tourism industry and fostering an environment that encourages investment in travel. 

“In fact, the future of tourism is dependent on building strong partnerships with the private sector. It is now more important than ever to enable and empower the private sector,” she explained. 

Al-Mayman went on to say: “This new framework for collaboration with the private sector and relevant government entities will improve the quality of services in the tourism sector and promote Saudi Arabia as one of the top five global destinations.” 

The two-day event concluded Thursday as CEOs and leaders delivered keynote comments, while panel discussions focused on three UNWTO essential themes: people, planet, and prosperity. 

Saudi Arabia will hand over the chair to Georgia, who will host the event next year.