Oil Updates - crude heads for weekly gains after Israel rejects ceasefire offer

Oil Updates - crude heads for weekly gains after Israel rejects ceasefire offer
Brent crude futures slipped 1 cent to $81.62 a barrel by 6:34 a.m. Saudi time. Shutterstock
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Updated 09 February 2024
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Oil Updates - crude heads for weekly gains after Israel rejects ceasefire offer

Oil Updates - crude heads for weekly gains after Israel rejects ceasefire offer

SINGAPORE: Oil prices were little changed on Friday, staying on track for weekly gains, with tensions persisting in the Middle East after Israel rejected a ceasefire offer from Hamas, according to Reuters.

Brent crude futures slipped 1 cent to $81.62 a barrel by 6:34 a.m. Saudi time, while US West Texas Intermediate crude futures rose 3 cents to $76.25 a barrel.

Both benchmarks rose about 3 percent in the previous session as Israeli forces bombed the southern border city of Rafah on Thursday after Prime Minister Benjamin Netanyahu rejected a proposal to end the war in the Palestinian enclave.

The tensions have kept oil prices elevated, with Brent and WTI both set to gain more than 5 percent for the week.

“The move yesterday seemed a bit excessive on the back of not very much at least in terms of fundamentals,” ING’s head of commodities research Warren Patterson said.

“I still expect the rangebound trading that we have become accustomed to recently will continue given the comfortable oil balance.”

US officials made their most pointed criticism so far of Israel’s civilian casualties in Gaza as it turned the focus of its offensive to Rafah.

A Hamas delegation arrived in Cairo on Thursday for ceasefire talks with mediators Egypt and Qatar.

While the conflict has propped up prices, there has been no impact on oil production.

Non-Organization of the Petroleum Exporting Countries output from Norway and Guyana is increasing while Russia is exporting more crude in February than it planned following a combination of drone attacks and technical outages at its refineries that could undermine its pledge to curb sales under a pact from OPEC and its allies, known as OPEC+

Under the deal, Russia committed to capping crude output at 9.5 million barrels per day. It is also voluntarily cutting crude exports by 300,000 bpd and fuel exports by 200,000 bpd from the average May-June level.

Deflation risks in China, the world’s top crude oil importer, are also weighing on global oil prices, IG analyst Tony Sycamore said.

“I think the lower crude oil price in Asia is largely due to early weakness in China’s equity markets and the fallout from yesterday’s shocking CPI figure in China which has served to further undermine confidence ahead of the Lunar New Year celebrations,” he added. 


Egypt’s finance minister says cutting inflation is priority

Egypt’s finance minister says cutting inflation is priority
Updated 7 sec ago
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Egypt’s finance minister says cutting inflation is priority

Egypt’s finance minister says cutting inflation is priority

CAIRO: The Egyptian government’s main priority is to reduce inflation to within the central bank’s target, Finance Minister Mohamed Maait said on Tuesday, adding that economic growth was expected to rise in the financial year starting in July to 4.2 percent, from 2.8 percent this year, according to Reuters.

Maait also said the government aimed to sell more state assets, which would reduce the state’s role in the economy, allow the private sector more ownership, increase productivity and generate revenue to reduce Egypt’s debt.

Egypt’s economy has been hurt over the last half year by the crisis in Gaza, which has slowed tourism growth and cut into Suez Canal revenue, two of the country’s biggest sources of foreign currency.

Revenue from the waterway has fallen by more than 60 percent, Maait said, speaking during the IMF Governor Talks series in Washington.

The challenges prompted the IMF to expand financial support to Egypt to $8 billion, while Egypt sharply devalued its currency, made its latest pledge to move to a flexible exchange rate, and struck a record $35 billion investment deal with a UAE sovereign wealth fund.

Inflation dipped to 33.3 percent in March from a record 38 percent in September, far higher than the central bank’s long-standing target of between 5 percent and 9 percent.

Egypt generated growth over the last decade by financing giant state projects, including a new $58 billion capital in the desert, through a borrowing spree abroad that quadrupled its foreign debt.

The government hopes to lower interest rates to reduce interest payments on debt, Maait said. The central bank so far this year has raised its overnight interest rates by 800 basis points.

The government has put a limit of 1 trillion Egyptian pounds ($20.6 billion) on all public investment, including that of the military, Maait said. The private sector should make up at least 65-70 percent of the economy, he added.

“Giving the main role to the private sector to lead the country is in the benefit of the state. Why? Because we have close to 1 million young people coming to the labor market looking for jobs every year,” Maait said.

“Who will be able to create that? The government cannot create more than 100,000 new jobs. An economy led by the private sector can create 900,000 — even more — jobs, but we have to give them the opportunity.”


Oil Updates – prices dip as demand worries outweigh Mideast supply fears

Oil Updates – prices dip as demand worries outweigh Mideast supply fears
Updated 20 min 57 sec ago
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Oil Updates – prices dip as demand worries outweigh Mideast supply fears

Oil Updates – prices dip as demand worries outweigh Mideast supply fears

TOKYO/SINGAPORE: Oil prices extended losses on Wednesday as worries about global demand due to weak economic momentum in China and a likely rise in US commercial stockpiles outweighed supply fears from heightened tensions in the Middle East, according to Reuters.

Brent futures for June fell 40 cents, or 0.44 percent, to $89.62 a barrel by 9:32 a.m. Saudi time, while US crude futures for May fell 48 cents, or 0.56 percent, to $84.88 a barrel.

Oil prices have softened so far this week as economic headwinds pressured investor sentiment, curbing gains from geopolitical tensions, with market’s eyeing on how Israel might respond to Iran’s attack over the weekend.

“With oil prices highly sensitive to geopolitical risks, the past week has seen some wait-and-see consolidation in place as Israel’s response will determine if there may be a wider regional conflict, which could significantly impact oil supplies,” said IG market strategist Yeap Jun Rong.

“For now, the near-term weakness in oil prices may reflect some expectations that tensions may still be contained and that other key oil producer such as Saudi Arabia may jump in to mitigate any global supply shock,” Yeap added.

In China, the world’s biggest oil importer, the economy grew faster than expected in the first quarter, but several March indicators, including property investment, retail sales and industrial output, showed that demand at home remains frail, weighing on overall momentum.

“Apart from that, a build-up in US crude inventories overnight and a mixed set of economic data out of China also offered some reservations, alongside near-term overbought technicals which prompts some profit-taking,” Yeap said.

US crude oil inventories rose last week more than expected by analysts polled by Reuters, according to market sources citing American Petroleum Institute figures on Tuesday. Official data from the Energy Information Administration, the statistical arm of the US Department of Energy, is due on Wednesday at 5:30 p.m. Saudi time.

In the Middle East, a third meeting of Israel’s war cabinet set for Tuesday to decide on a response to Iran’s first-ever direct attack was put off until Wednesday, as Western allies eyed swift new sanctions against Tehran to help dissuade Israel from a major escalation.

Analysts however do not expect Iran’s unprecedented missile and drone strike on Israel to prompt dramatic sanctions action on Iran’s oil exports from the Biden administration.

Meanwhile, the US government could reimpose oil sanctions on Venezuela on Thursday — which in turn could tighten supplies in the market.

Prices could trade sideways in the meantime because of these current market drivers, analysts say.

WTI price movements in the short term are likely to be trapped in a sideways range between $83.20 and $87.70 due to conflicting factors such as China’s disappointing retail sales in March and geopolitical risk premium still remaining intact, said OANDA senior market analyst Kelvin Wong.


Saudi Fund for Development, St. Kitts and Nevis sign energy loan agreement

Saudi Fund for Development, St. Kitts and Nevis sign energy loan agreement
Updated 16 April 2024
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Saudi Fund for Development, St. Kitts and Nevis sign energy loan agreement

Saudi Fund for Development, St. Kitts and Nevis sign energy loan agreement
  • $40 million will finance the expansion of St. Kitts and Nevis’ power generation capabilities through the establishment of a dual-fuel power generation station with a capacity of 18 megawatts

RIYADH: Saudi Arabia on Tuesday signed a loan agreement with St. Kitts and Nevis for $40 million to support the Caribbean nation’s energy sector, Saudi Press Agency reported.

The agreement was signed by the CEO of the Saudi Fund for Development, Sultan bin Abdulrahman Al-Murshid, and the deputy prime minister of St. Kitts and Nevis, Geoffrey Hanley, on the sidelines of spring meetings of the Bank Group and the International Monetary Fund in Washington DC.

The $40 million will finance the expansion of St. Kitts and Nevis’ power generation capabilities through the establishment of a dual-fuel power generation station with a capacity of 18 megawatts.

The project will contribute to providing a flexible hybrid power generation platform to improve efficiency and burn clean fuel and to support the transition to a sustainable energy future.

The agreement is part of the SDF’s mission to support countries and small island developing states around the world to overcome developmental challenges.


Saudi air cargo volumes witness 7% rise: GACA

Saudi air cargo volumes witness 7% rise: GACA
Updated 16 April 2024
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Saudi air cargo volumes witness 7% rise: GACA

Saudi air cargo volumes witness 7% rise: GACA

RIYADH: The volume of air cargo handled by airports in Saudi Arabia saw an annual rise 7 percent in 2023 to reach 918,000 tonnes, official data showed. 

In its latest report, the General Authority for Civil Aviation said that the Kingdom’s aviation sector strongly rebounded in 2023, with airports witnessing a 26 percent rise in passenger transportation compared to 2022. 

GACA said that flight facilities in Saudi Arabia transported 112 million passengers last year, which also represented a rise of 8 percent compared to 2019.

The report revealed that the number of flights through the Kingdom’s airports in 2023 reached about 815,000, an increase of 16 percent compared to 2022.

In 2023, airports in Saudi Arabia handled 394,000 international and 421,000 domestic journeys, the authority added. 

Fueled by significant growth in the Kingdom’s travel and tourism sector, 61 million international visitors and 51 million domestic passengers traveled through the region’s airports in 2023. 

King Abdulaziz International Airport topped the list of the leading Saudi airports in terms of the number of flights, at a rate of 30 per hour. 

KAIA was followed by King Khalid International Airport in Riyadh, which operated an average of 27 flights per hour, while King Fahd International Airport operated 11 carriers in an hour. 

In February, Mohammed Al-Khuraisi, the executive vice president of strategy and business intelligence at GACA, said that Saudi Arabia’s aviation sector is expanding rapidly to meet the goal of reaching 250 destinations globally. 

He also added that the Kingdom jumped 14 places in the International Air Transport Association Air Connectivity Index in 2023, along with achieving the highest level of air connectivity during the year 2023 by reaching 149 destinations.

Earlier this month, GACA, through its Air Transport and International Cooperation Sector, authorized China Southern Airlines to operate journeys between Riyadh and three cities in the Asian nation. 

As a part of the authorization, the Chinese air carrier will operate flights from Beijing, Guangzhou, and Shenzhen to the Saudi capital. 

This initiative is part of GACA’s continuous efforts to strengthen connectivity and broaden the Kingdom’s air transport network as part of the objectives of Saudi Vision 2030.


IMF raises growth forecast for Saudi economy to 6% in 2025

IMF raises growth forecast for Saudi economy to 6% in 2025
Updated 16 April 2024
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IMF raises growth forecast for Saudi economy to 6% in 2025

IMF raises growth forecast for Saudi economy to 6% in 2025

RIYADH: The International Monetary Fund has raised its expectations for Saudi Arabia’s economic growth in 2025 to 6 percent – up from 5.5 percent predicted earlier this year. 

In its latest report, the IMF also noted that the Kingdom’s output will grow by 2.6 percent in 2024, down 0.1 percent compared to the previous projection. 

The financial institution added that the overall economic growth in the Middle East and Central Asian region is projected at 2.8 percent and 4.2 percent in 2024 and 2025, respectively. 

Earlier in April, the World Bank also raised the growth prospects of the Kingdom’s economy to 5.9 percent in 2025, up from an earlier projection of 4.2 percent. 

Taming inflation should be a priority

According to the IMF, global economic growth, which is estimated at 3.2 percent in 2023, is projected to continue at the same pace in 2024 and 2025. 

The report further pointed out that global headline inflation is expected to drop 5.9 percent this year after 2023’s 6.8 percent average. 

However, the IMF warned that it is still too early to declare victory in the fight against inflation. 

“Bringing inflation back to target should remain the priority. While inflation trends are encouraging, we are not there yet. Somewhat worryingly, progress toward inflation targets has somewhat stalled since the beginning of the year. This could be a temporary setback, but there are reasons to remain vigilant,” said IMF Economic Counsellor Pierre-Olivier Gourinchas. 

He added: “Most of the good news on inflation came from the decline in energy prices and in goods inflation. The latter has been helped by easing supply-chain frictions, as well as by the decline in Chinese export prices. But oil prices have been rising recently in part due to geopolitical tensions and services inflation remains stubbornly high.” 

Global economic recovery differs by region

According to the report, the global economy was resilient in 2023, but these gains were felt differently as low-income countries continued to experience the after-effects of the pandemic. 

“We now estimate that there will be more scarring for low-income developing countries, many of which are still struggling to turn the page from the pandemic and cost-of-living crises,” said Gourinchas. 

The IMF also called on countries to rebuild their fiscal buffers to help protect their sovereign debt levels, which will help them reverse the decline in medium-term growth prospects. 

“Going forward, policymakers should prioritize measures that help preserve or even enhance the resilience of the global economy. The first such priority is to rebuild fiscal buffers. Even as inflation recedes, real interest rates remain high and sovereign debt dynamics have become less favorable,” he added.