LONDON: Oil fell on Wednesday, as Saudi Arabia’s announcement to continue crude output cuts to the end of 2023 was offset by demand fears stemming from macroeconomic headwinds.
Brent crude oil futures were down 87 cents, or 0.96 percent, to $90.05 a barrel at 1:14 p.m. Saudi time, while US West Texas Intermediate crude fell 94 cents, or 1.05 percent, to $88.29 per barrel.
Both contracts traded more than $1 lower than Tuesday’s settlement price at their intraday on Wednesday, with Brent falling to $89.83 a barrel, and WTI to $88.11 a barrel.
Prices remain under pressure from demand fears driven by macroeconomic headwinds.
“Oil prices are resuming their decline amid concerns over high interest rates for longer, hurting the demand outlook and as investors look ahead to the OPEC (Organization of the Petroleum Exporting Countries) meeting,” said Fiona Cincotta, analyst at City Index.
Saudi Arabia’s energy ministry confirmed on Wednesday it will continue its voluntary 1 million barrel per day crude supply cut until the end of this year.
Russia said it will continue its current 300,000 bpd crude export cuts until the end of the year, and will review its voluntary 500,000 bpd output cut, set back in April, in November.
Russia was also discussing partial permission for fuel exports “at all levels,” state-run TASS agency reported on Wednesday, citing Russian Energy Minister Nikolai Shulginov.
The Kremlin could be ready to ease its diesel ban in coming days, according to a daily Kommersant report on Wednesday citing unidentified sources.
A strong US dollar could also be weighing on investor sentiment.
The current dollar strength is “a rally that will continue to haunt all markets including oil, even when, as is now, there is a compelling fundamental backdrop,” PVM analyst John Evans said.
As the trade currency of oil, a strong dollar makes oil comparatively expensive for holders of other currencies, which can dampen demand.
Elsewhere, latest purchasing managers’ index data showed a score of 47.2 in September for the euro zone, edging higher from 46.7 in August. Anything below 50 implies economic contraction.
World leaders take centerstage in high-level COP28 event
Saudi Arabia also is hosting the third edition of the Saudi Green Initiative Forum on Dec. 4, alongside UN’s COP28 event
Updated 10 min 42 sec ago
DUBAI: More than 130 world leaders take centerstage as they address the United Nations climate conference in Dubai over the next two days to deliver national statements.
Expected to give their national statements include UAE President Sheikh Mohamed Bin Zayed Al-Nahyan, Egyptian President Abdel Fattah El-Sisi, Jordan’s King Abdullah, Qatar’s ruler Sheikh Tamim bin Hamad Al-Thani, Palestinian President Mahmoud Abbas and Turkish President Recep Tayyip Erdogan.
The COP28 conference notched an early victory on Thursday with the launch of a long-awaited fund to address growing loss and damage from wilder weather and rising sea in vulnerable countries.
Initial pledges have been made to the fund to officially put it into operation, with a $100-million contribution from the UAE matched with the same from Germany.
Britain gave just over $50 million, while the United States offered $17.5 million and Japan $10 million.
The European Union and its member states later confirmed a further $145 million, bringing the total to more than $420 million so far.
Delegates however face two weeks of tough negotiations on an array of issues that have long bedeviled climate talks, starting with the future of fossil fuels.
Saudi Arabia is hosting the third edition of the Saudi Green Initiative Forum on Dec. 4, alongside UN’s COP28 event, to highlight its dedication to build a greener future at a time of multibillion dollar giga-projects.
The SGI forum will gather influential figures, climate experts and thought leaders to present their insights and recommendations for tackling climate change as well as showcase the initiative’s achievements and plans.
LONDON: Saudi Arabia’s Red Sea Global is looking forward to showcasing the role of tourism development in the environment at the UN Climate Change Conference (COP28) this week.
John Pagano, the chief executive officer of RSG, told Arab News: “Our aim is to help lead by example and demonstrate how tourism development can play a more positive role in mitigating some of the world’s greatest challenges and support our industry peers in this transition.
“For us, communicating some of the ways in which we’ve been able to walk the walk, and not just talk the talk, is key as all eyes turn to the event and its participants, looking for action not just conversation.”
The conference is being held in Dubai from Nov. 30 to Dec. 12 – the second consecutive Arab country to host the annual gathering after Egypt last year.
“COP28 provides a global platform for discussions and decision-making between nations on the topic of climate change,” Pagano said, adding that RSG and several of its experts would be attending, exhibiting, and speaking at various elements of the forum.
RSG, which is wholly owned by the Saudi Public Investment Fund and was established in 2018, recently concluded its participation at the World Travel Market in London, and Pagano noted that the main difference with their participation this year was that they had been able to talk about being open.
Last month The Red Sea welcomed its first guests and two of its hotels are open for bookings, and the Red Sea International Airport has been receiving a regular schedule of flights since September.
Pagano said: “The Red Sea, our luxurious destination situated on the western coastline of Saudi Arabia, has welcomed its first visitors, while Red Sea International Airport, which is on track to be the Middle East’s first carbon-neutral airport, has a regular schedule of flights.
“We’re excited that people can now book a vacation to come and see for themselves what we’ve achieved — awe-inspiring resorts and experiences in scenes of unrivalled beauty, underpinned by a profound respect for the area’s natural treasures,” he added.
Upon full completion in 2030, the destination will comprise 50 resorts, offering up to 8,000 hotel rooms and more than 1,000 residential properties across 22 islands and six inland sites. The destination will also include luxury marinas, golf courses, entertainment, food and beverage, and leisure facilities.
The CEO said: “(People have been) intrigued by the opening of The Red Sea and energized by our vision of regenerative tourism, which involves improving, and not just protecting, natural environments.
“Since we started on our journey six years ago, we’ve always relished the moment we would be able to talk to industry peers about hotels and resorts being open, so our experience at this year’s WTM will always be special for us.”
He pointed out that The Red Sea opening was not the only reason it had been a year of evolution for the organization, highlighting its launch of a series of subsidiary brands designed to elevate the guest experience, including WAMA and Galaxea to provide watersports and diving experiences, and Akun to operate and manage adventure sports.
“So, it’s been great to talk to industry peers about how we envisage these entities boosting tourism to the Kingdom while upholding our commitment to sustainability,” he added.
RSG has won several awards over recent years in recognition of its efforts and initiatives to promote sustainable and eco-friendly tourism, the latest of which was achieving the highest score recorded to date in the prestigious Platinum LEED v4.1 accreditation from the US Green Building Council, which served as a testament to RSG’s dedication to sustainability and marked a major milestone in the development of regenerative tourism destinations.
On the year ahead, Pagano said: “With people visiting The Red Sea for the first time, we want to ensure that they leave with unforgettable memories and a desire to return again, so the smooth operation of the destination will be a major focus for us throughout the year.”
Developing world-class destinations will also be a priority.
“For example, Amaala – designed to offer transformative personal journeys inspired by arts, wellness, and the purity of the Red Sea – is set to welcome its first guests in 2025, so we look forward to providing further updates at next year’s conference,” he added.
Collectively RSG’s portfolio, which includes the two world-leading destinations — The Red Sea and Amaala — part of Vision 2030, are responsible and regenerative tourism destinations that will aim to enhance the Kingdom’s luxury tourism and sustainability offering, protect the natural environment, and enhance it for future generations.
Pagano said: “We are also committed to our sustainability goals and making our vision of regenerative tourism a reality.
“This year saw us complete the installation of five solar farms, laying 760,000 photovoltaic panels to power the first phase of The Red Sea destination.
“We are also delivering on our strategy for destination-wide clean mobility using electric and hybrid vehicles, boats, and aircraft.
“By 2040, we are committed to delivering a 30 percent net conservation benefit across our destinations through the enhancement of biologically diverse habitats including mangroves, seagrass, corals, and land vegetation.”
He noted that The Red Sea marine biology team monitored around 300 coral reef sites in the Red Sea, and that a pilot phase of coral gardening was now underway to establish what structures and methods worked best for propagating corals. So far, he added, the results had been extremely promising.
“Our mangrove nursery, launched in partnership with the National Center for Vegetation Cover, is on track to meet the goal of planting 50 million mangrove trees by 2030, with the first 1 million seedlings already planted. We are also exploring hands-on opportunities for guests to support coral farming and planting of mangrove seedlings.”
It is one of the programs under the Saudi Green Initiative, launched by Crown Prince Mohammed bin Salman in 2021, to plant 10 billion trees throughout the Kingdom to increase vegetation cover and help combat desertification.
The 10 billion trees are part of a total of 50 billion trees that are to be planted in the region under the Middle East Green Initiative, also launched by the crown prince the same year.
“We hope that we will have inspired others across the tourism sector to follow our lead,” Pagano said.
He added that The Red Sea and Amaala’s key features — including 24/7 renewable energy, zero single-use plastics, and zero waste to landfill — “might have sounded ambitious when we first announced them, but by 2040, we believe that they will be the norm across our industry.”
Brazil president’s Saudi visit shows desire for stronger ties
Luiz Inacio Lula da Silva visited Riyadh this week with delegation of ministers, businesspeople
‘Brazil has a great opportunity to play the role of a strategic partner of Saudi Arabia,’ says head of Arab-Brazilian Chamber of Commerce
Updated 30 November 2023
Eduardo Campos Lima
SAO PAULO: The visit of Brazil’s president to Riyadh on Nov. 28-29 with a delegation of ministers and businesspeople showed that he wants to strengthen ties with Saudi Arabia and is counting on its participation in projects, especially those involving green energy.
After an event that gathered Brazilian and Saudi authorities and business leaders on Wednesday, Luiz Inacio Lula da Silva invited the Kingdom to be “Brazil’s partners” in the energy transition that has been taking place in the South American nation.
“If Saudi Arabia is the most important country in the production of oil and gas, in 10 years from now Brazil will be called ‘the Saudi Arabia of green energy’,” Lula said in his speech.
Mining and Energy Minister Alexandre Silveira presented in the same meeting an overview of Brazil’s energy endeavors, and initiatives in which Saudi investors can take part.
The previous day, he met with Saudi Energy Minister Abdulaziz bin Salman and signed a memorandum of understanding aimed at improving cooperation between the two nations.
The MoU encompasses projects in various fields, including oil and gas, electricity, energy efficiency, petrochemicals, hydrogen, renewable energy and the circular carbon economy. The agreement also comprises academic partnerships for joint research involving energy.
“We are in Saudi Arabia demonstrating Brazilian leadership in the energy transition and seeking to further expand our relationship with the country,” Silveira said, adding that one of the visit’s goals was to attract investors.
The Saudi government had already announced in 2019, during former President Jair Bolsonaro’s tenure, a plan to invest $10 billion from its sovereign fund in Brazilian projects. Many of them are expected to be related to green energy and infrastructure.
“Brazil has great growth potential in all segments of renewable energies. Solar energy, wind power and biomass energy already make up a significant part of the Brazilian total energy production, but they can reach a much higher level,” Jose Roberto Simoes Moreira, an engineering professor who coordinates the University of Sao Paulo’s renewable energy program, told Arab News.
In 2022, almost half of Brazilian energy came from renewable sources. Solar and wind power were responsible for 90 percent of the expansion in energy production in 2023.
“Those energy sources were responsible for keeping the system safe and functional. We’ve been operating near the limit. Without the expansion in renewable energy, Brazilians would have problems,” Simoes Moreira said.
Especially in the northeast of the country, where most solar and wind plants have been implemented over the past few years, there is still room for new projects on land. Many entrepreneurs have already developed plans for offshore wind plants.
“They’re more expensive and present additional implementation challenges, but in Europe they’ve been numerous. In Brazil, that’s only the beginning,” Simoes Moreira said.
Enhancing the Brazilian energy system also requires the expansion of its energy distribution infrastructure.
The largest consumer market is in the southeast, which is far from the energy units in the northeast, said Simoes Moreira.
“It’s necessary to also invest in the expansion of transmission lines. The current ones are on the verge of full operation,” he added.
Osmar Chohfi, who heads the Arab-Brazilian Chamber of Commerce, said one of the sectors in which many joint projects can be carried out by Saudi Arabia and Brazil is green hydrogen.
“Brazil has a great opportunity to play the role of a strategic partner of Saudi Arabia. But in order for that to happen, it’s necessary to come up with well-conceived projects led by companies with high-quality governance and with a safe regulations system,” he said in a statement.
Chohfi recalled that Saudi Arabia has the goal of becoming a carbon-free country by 2060, so it has been investing heavily in the development of new energies.
The largest green hydrogen plant in the world, which is being constructed in the Red Sea, is part of that effort.
“In Brazil, Saudi investors can not only take part in projects involving renewable energies, but also in initiatives connected to carbon credits in order to compensate emissions during the transition process,” Chohfi said.
Regarding oil and gas, Simoes Moreira said Brazil still has great potential not only in energy production, but also in the petrochemical industry.
Besides energy, other MoUs were signed between Embraer, a leading aircraft manufacturer in Brazil, and the Saudi government, Saudi Arabian Military Industries, and Saudi airline Flynas.
The Brazilian delegation also discussed infrastructure projects with its Saudi counterparts. Ports and Airports Minister Silvio Costa Filho presented to business leaders opportunities concerning Brazilian ports, which may be partially privatized.
Lula has been looking for funds for his Growth Acceleration Program, a comprehensive public works initiative that will encompass several kinds of public works in the next few years.
Measures to enhance bilateral trade were also discussed between Lula and Crown Prince Mohammed bin Salman.
In 2022, commerce between Brazil and Saudi Arabia reached $8.221 billion. Brazil bought mainly hydrocarbons and fertilizers ($5.297 billion), while the Kingdom mostly bought halal protein ($2.924 billion). The two leaders believe that trade could reach $20 billion by 2030.
Saudi Aramco sets LPG contract prices for December
Updated 30 November 2023
RIYADH: The Saudi Arabian Oil Co., also known as Saudi Aramco, kept the official selling prices for liquefied petroleum gas in December unchanged from the previous month, according to an official statement.
Aramco’s December OSP for propane is $610 per ton, while price for butane has been set at $620 per ton.
Propane and butane are types of LPG with different boiling points.
LPG is mainly used as a fuel for cars, heating and as a feedstock for other petrochemicals.
Aramco’s OSPs for LPG are used as a reference for contracts to supply the product from the Middle East to the Asia-Pacific region.
Saudi Arabia extends 1 million bpd voluntary cuts until Q1 2024
Updated 30 November 2023
RIYADH: Saudi Arabia on Tuesday decided to extend its voluntary crude output cuts of 1 million barrels per day until the end of the first quarter of 2024 in coordination with some OPEC+ members, the state-run Saudi Press Agency reported quoting an official source from the Ministry of Energy.
It is the continuation of the Kingdom’s decision made in July, it added.
Following the latest decision, Saudi Arabia’s crude production will remain at approximately 9 million bpd until the end of March 2024. The report added that after the first quarter “in order to support market stability, these additional cuts” will be returned gradually subject to market conditions.
The source also noted that this voluntary cut is in addition to the voluntary cut of 500,000 bpd announced by the Kingdom in April 2023, which extends until the end of December 2024.
The source confirmed that these additional voluntary cuts seek to reinforce the efforts made by the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, to support the stability and balance of oil markets.
Russia also said on Thursday it would deepen its voluntary oil production cut to 500,000 bpd and extend it until the end of the first quarter of 2024.
The extra cuts are intended to “maintain stability and balance in the oil market,” Deputy Prime Minister Alexander Novak said in a statement following a meeting of OPEC+ ministers held in Vienna.
Kuwait followed suit by announcing voluntary cuts of 135,000 bpd for three months starting Jan. 1, Kuwait’s state news agency KUNA said on Thursday citing the country’s oil minister.
Kuwait’s oil production will be 2.413 million bpd to the end of March 2024, said Saad Al-Barrak. He said the cut was on top of a 128,000 bpd voluntary cut announced in April, KUNA said.
These announcements came after the OPEC+ members met in an online meeting about global oil production. The OPEC+ ministers set quotas for Angola, Congo and Nigeria after they postponed their meeting originally set for Sunday by four days. There was no immediate word on reductions from other member countries.
Brazil hopes to join the OPEC+ in January after a technical analysis of the charter for cooperation, the country’s energy minister said on Thursday, reported Reuters.
President Luiz Inacio Lula da Silva’s office confirmed receiving the invite during his trip to Saudi Arabia, but said he had not formally responded.
The president’s office and the Mines and Energy Ministry did not say whether Brazil would participate as an OPEC+ observer or as a full participant in the group’s shared production quotas.
Mines and Energy Minister Alexandre Silveira told his OPEC+ peers that Brazil was eager to formally enter the group at a future meeting in Vienna, after a technical review of its charter for cooperation.
“It’s all set. But there is a phase of detailed analysis by our technical team of the document we just received, which is part of the protocol in Brazil,” Silveira said in Portuguese during a virtual meeting, where his comments were met with a standing ovation from OPEC+ ministers.
In a statement OPEC+ said it welcomed Silveira to the meeting, adding that Brazil “will join the OPEC+ Charter of Cooperation starting January 2024.”