Oil Updates – crude edges up as summer demand hopes offset downbeat China data

Update Oil Updates – crude edges up as summer demand hopes offset downbeat China data
Global benchmark Brent crude futures were up 33 cents, or 0.4 percent, to $82.95 a barrel at 3:12 p.m. Saudi time. Shutterstock
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Updated 17 June 2024
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Oil Updates – crude edges up as summer demand hopes offset downbeat China data

Oil Updates – crude edges up as summer demand hopes offset downbeat China data

LONDON: Oil edged higher on Monday as hopes for a boost to demand from the summer driving season in the northern hemisphere offset Chinese data that underscored a bumpy recovery for the world’s biggest crude importer, according to Reuters.

Apart from retail sales that beat forecasts due to a holiday boost, the flurry of Chinese data on Monday was largely downbeat. The data followed a survey on Friday showing US consumer sentiment fell to a seven-month low in June.

Global benchmark Brent crude futures were up 33 cents, or 0.4 percent, to $82.95 a barrel at 3:12 p.m. Saudi time. US West Texas Intermediate crude futures gained 25 cents, or 0.3 percent, to $78.70.

Last week, both benchmarks posted their first weekly gain in four weeks on elevated confidence that oil inventories are set to plunge as the summer season gets under way in the northern hemisphere amid continued OPEC+ supply cuts.

“The crude oil market initially responded negatively to mixed data from China,” said Ole Hansen of Saxo Bank.

“But the outlook for strong fuel demand into the coming quarter and Saudi reassurance about the October hike being subject to prevailing conditions and added focus on quota breakers to bring production down and into line all seems to be supporting.”

Saudi Arabia has said OPEC+’s planned fourth-quarter increase in output can be can paused or reversed if needed.

Russia and Iraq, which have been pumping more than their OPEC+ quotas, pledged last week to meet their obligations.

Reports from OPEC and the International Energy Agency last week, although differing on the strength of oil demand growth this year, had supported confidence that inventories would be drawn down in the second half.

Still, Bank of America analysts said in a report that while the market consensus is for higher oil prices in the third quarter, there is a risk to prices if weak supply and demand balances persist.

“It is not yet clear whether balances will firm enough in the third quarter to tip the market from a large apparent surplus into a deficit that can lift prices,” BofA analysts including Francisco Blanch wrote.

On the geopolitical front, concerns of a wider Middle East war lingered after the Israeli military said on Sunday that intensified cross-border fire from Lebanon’s Hezbollah movement into Israel could trigger serious escalation. 


Saudi finance minister heads Kingdom’s delegation to G20 ministerial meeting in Brazil

Saudi finance minister heads Kingdom’s delegation to G20 ministerial meeting in Brazil
Updated 37 sec ago
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Saudi finance minister heads Kingdom’s delegation to G20 ministerial meeting in Brazil

Saudi finance minister heads Kingdom’s delegation to G20 ministerial meeting in Brazil

RIYADH: Ongoing global challenges, financial sector issues, and the international economic outlook will be key topics as Saudi Arabia participates in a meeting of G20 finance ministers and central banks in Brazil this week.

Finance Minister Mohammed Al-Jadaan will head the Kingdom’s delegation at the third Finance Ministers and Central Bank Governors meeting in Rio de Janeiro from July 25 to 26 under the Brazilian G20 Presidency, according to a ministry statement.

Other topics on the agenda include financial inclusion, international taxation cooperation, climate change, and financing sustainable development as well as capital flows, global debt, and reform of Multilateral Development Banks.

This falls in line with the Ministry of Finance’s goal of doubling the size of the financial sector and boosting gross domestic product growth.

It also cements the ministry’s aim to align the financial market’s size with that of the banking sector, while establishing an inclusive system benefitting most Saudi citizens.

According to the 2023 Financial Sector Development Program document, the Saudi Capital Market Authority plans to boost assets under management to 29.4 percent of the gross domestic product this year by increasing the investment environment and attracting more investors.

The Saudi delegation includes the Governor of the Saudi Central Bank Ayman Al-Sayari, along with other senior officials from the Saudi Ministry of Finance and SAMA.

The meeting convenes G20 ministers and central bank governors, several representatives of invited countries, and heads of global and regional financial organizations.

In June, the Riyadh-based Financial Academy unveiled its new strategy for 2024-2026, focusing on enhancing human capabilities in the sector through training programs and professional certifications.  

The academy aims to increase the number of trainees and improve the quality of its services to meet the evolving needs of the industry.


Historic Jeddah to support securing local workforce with new agreement

Historic Jeddah to support securing local workforce with new agreement
Updated 14 min 48 sec ago
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Historic Jeddah to support securing local workforce with new agreement

Historic Jeddah to support securing local workforce with new agreement

RIYADH: Saudis will receive training and support to help secure hospitality jobs in Historic Jeddah thanks to a new agreement between the Ministry of Tourism and Al-Balad Development Co. 

The memorandum of understanding aims to boost collaboration by leveraging resources to enhance knowledge exchange and empower local talent across the hotel, heritage tourism, and tour guiding industries.

The Public Investment Fund’s wholly owned company serves as the heritage-focused master developer and asset manager for Jeddah’s Al-Balad area. Spanning 2.5 sq. km along the Red Sea coast, the site recently marked its 10th anniversary on the UNESCO World Heritage List. 

Saudi Arabia aims to unlock its tourism potential and position the region as a premier global destination by facilitating investment, promoting cultural heritage, and encouraging innovation in the hospitality sector. 

The Kingdom targets attracting over 150 million visitors by 2030, creating 1.6 million tourism jobs, and increasing the sector’s contribution to gross domestic product to over 10 percent.  

The MoU was signed by Jamil Hasan Ghaznawi, CEO of Al-Balad Development Co., and Hind Al-Zahid, acting deputy for human capital development at the Ministry of Tourism, with the signing witnessed by Minister of Tourism Ahmed Al-Khateeb, according to the Saudi News Agency. 

Through its Al-Balad Hospitality arm, the firm plans to deliver over 1,800 hotel units in the area in the coming years. 

The company aims to offer visitors unique hotel experiences that blend authenticity and history with modern comforts in the heart of Historic Jeddah. 

Launched in early 2024, Al-Balad Hospitality provides a range of accommodations, from heritage hotels in Jeddah to redefined authentic stays.

The Jeddah Historic District, once a Red Sea fishing village and key Silk Road trading hub, now boasts over 600 historic buildings with distinctive architecture and a rich cultural heritage. 

The Ministry of Culture oversees the Jeddah Historic District program, which aims to revitalize the area and establish it as a cultural and heritage destination.


Kuwait turns to deficit of 1.6 bln dinars in FY 2023/24, finance ministry says

Kuwait turns to deficit of 1.6 bln dinars in FY 2023/24, finance ministry says
Updated 57 min 30 sec ago
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Kuwait turns to deficit of 1.6 bln dinars in FY 2023/24, finance ministry says

Kuwait turns to deficit of 1.6 bln dinars in FY 2023/24, finance ministry says
  • Kuwait’s oil revenues fell to 21.528 billion dinars in FY 2023/24

KUWAIT CITY: Kuwait registered a deficit of 1.6 billion dinars ($5.23 billion) in fiscal year 2023/24 from a surplus of 6.4 billion dinars in the previous year, its finance ministry said in a statement on Wednesday.
Kuwait’s oil revenues fell to 21.528 billion dinars in FY 2023/24, based on an oil price of $86.36 a barrel. This was a fall in revenue from 26.713 billion dinars in the previous year.
The Gulf state has had to comply with production cuts by the OPEC+ producer group amid lower oil prices this year while making slow progress on diversifying revenue sources compared with its Gulf neighbors.
Expenditures reached 25.206 billion dinars compared to 22.370 billion dinars in the previous year. Kuwait’s fiscal year ends on March 31.
Kuwait holds some of the world’s largest oil reserves and has strong fiscal and external balance sheets, but political and institutional gridlock has hampered investment and reforms aimed at reducing its heavy reliance on oil. 


NEOM projects to receive $27.7m of cement from Al Jouf and Webuild partnership 

NEOM projects to receive $27.7m of cement from Al Jouf and Webuild partnership 
Updated 24 July 2024
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NEOM projects to receive $27.7m of cement from Al Jouf and Webuild partnership 

NEOM projects to receive $27.7m of cement from Al Jouf and Webuild partnership 

RIYADH: NEOM projects are set to receive cement worth SR104 million ($27.7 million) as Saudi Arabia’s Al Jouf Cement Co. partners with Italy’s Webuild SpA. 

The Saudi company has officially entered into an agreement with Webuild SpA, in a deal that involves the sale of cement for various developments.

In a statement released on Tadawul, Al Jouf detailed that the duration of the contract is 41 months from the date of signing and is subject to increased quantities. 

The company expects this agreement to have a positive impact on its financial statements starting from the third quarter of this year and continuing through the end of the contract period. 

The Kingdom’s $500 billion giga-project is at the northern tip of the Red Sea, east of Egypt across the Gulf of Aqaba and south of Jordan. 

NEOM is set to host several projects, including The Line, which is a mirrored structure that stretches 170 kilometers, 500 meters above the sea and 200 meters wide. 

Trojena is also part of NEOM’s regional plan, situated 50 kilometers from the Gulf of Aqaba coast. The mountainous area spans nearly 60 sq. kilometers and features elevations ranging from 1,500 to 2,600 meters. 

Earlier in May, NEOM announced that it will build a new marina and community also on the Gulf of Aqaba called Jaumur. 

The destination will be an exclusive residential community planned around a marina promenade for more than 6,000 residents, and will include 500 marina apartments and around 700 luxury villas.

Earlier this month, NEOM and American hospitality firm Equinox Hotels announced plans to open a resort on the coast of the Gulf of Aqaba as part of the recently unveiled Magna development. 

The luxury destination will feature 12 locations along 120 kilometers of coastline, and will include 15 hotels, 1,600 rooms, and over 2,500 residences. 

Emirates Steel, part of Emirates Steel Arkan Group, one of the largest publicly traded steel and building materials manufacturers in the region, also partnered with Eversendai, a global powerhouse in steel construction, earlier this month to build the NEOM Trojena Ski Village. 


Riyadh office market thriving thanks to regional HQ initiative: Savills 

Riyadh office market thriving thanks to regional HQ initiative: Savills 
Updated 17 min 47 sec ago
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Riyadh office market thriving thanks to regional HQ initiative: Savills 

Riyadh office market thriving thanks to regional HQ initiative: Savills 
  • The British real estate consultancy firm noted that this trend is expected to persist
  • Savills said the city’s expanding market and promising economic prospects were attracting leading businesses from various industries

RIYADH: The office market in Riyadh continued its strong performance in the second quarter of 2024, thanks to government investment incentives attracting international corporations to establish regional headquarters. 

According to the latest Saudi commercial market report by Savills, over 120 international companies relocated their regional headquarters to the Kingdom’s capital in the first quarter of this year, marking a 477 percent increase compared to the same period in 2023. 

The moves came after the Saudi government announced a range of benefits for those companies that set up Middle East bases in Riyadh, including a 30-year exemption from corporate income tax, withholding tax on headquarters activities, as well as discounts and support services. 

Ramzi Darwish, head of Saudi Arabia at Savills Middle East, said: “The Kingdom’s ongoing efforts to diversify its revenue streams and create an attractive business environment are proving successful, as evidenced by the high volume of international inquiries.”   

He added: “In the second quarter of 2024 alone, nearly 70 percent of inquiries received by Savills originated from outside Saudi Arabia, with a significant portion of 50 percent coming specifically from US and UK corporations.” 

This growth in leasing activity was driven by sectors such as technology, media and telecommunications, consulting and engineering, manufacturing, and IT, with 50 percent of transactions involving new entrants, reflecting a positive market sentiment for expansion.  

The British real estate consultancy firm noted that this trend is expected to persist, supported by a strong pipeline of inquiries for the remainder of the year. 

The report also noted that the increase in leasing activity in the capital led to rent prices in North and North-East Riyadh seeing annual increases of 23 percent and 20 percent, respectively. 

These price rises sit alongside foreign direct investment in the city rising 5.6 percent year-on-year in the first quarter of 2024. 

“Limited prime office space in Riyadh, coupled with strong business confidence, has driven Grade A occupancy as high as 98 percent, and rents are increasing steadily, rising by 3 percent quarter-over-quarter in Q2 and a significant increase of 13 percent year-on-year,” said Amjad Saif, head of transactional services at Savills in KSA. 

Savills noted that the city’s expanding market and promising economic prospects were attracting leading businesses from various industries, reinforcing Riyadh’s role as a crucial hub for both regional and global commerce. 

It also noted that prominent companies such as PayerMax and Ernst & Young have established their regional headquarters in the Kingdom.  

Other notable firms include Northern Trust, Bechtel, and PepsiCo, as well as IHG Hotels & Resorts, PwC, and Deloitte. 

Riyadh office market 

The UK-based firm noted that limited prime office space in Riyadh drove Grade A occupancy rates to 98 percent by the end of the second quarter, with these facilities commanding higher rents due to their location, modern infrastructure, and newer construction. 

“This trend reflects a thriving office market in the Saudi capital. Fuelled by robust demand, however, a significant increase in Grade A office space supply is anticipated by the end of 2025. This anticipated influx of over 650,000 square meters of new space is expected to enhance tenant options and mitigate the potential for a supply shortage,” added Savills in the report.  

The analysis noted significant leasing activity in the second quarter of this year, led by engineering and manufacturing companies, followed by legal services and pharmaceutical firms. 

According to Savills, around 60 percent of leasing inquiries were focused on office spaces under 1,000 sq. meters, indicating a rising preference for agile and efficient work environments. 

Non-oil sector  

Savills noted that Saudi Arabia’s non-oil sector emerged as a key economic driver, expanding by 3.4 percent in the first quarter of 2024 compared to the same period last year.  

The firm pointed out that Saudi Arabia’s moderate inflation rate of 1.6 percent in May is a positive indicator for the non-oil business environment.  

Savills, citing data from S&P Global and Riyad Bank, added that the Purchasing Managers' Index remained steady in the expansionary zone at 56.4 in May, marking the 45th consecutive month above the neutral 50 threshold, which signals growth in the Kingdom’s private sector. 

The latest S&P Global report on July 3 revealed that the PMI stabilized at 55, driven by increased demand, higher output levels, and rising employment. 

In that report, Naif Al-Ghaith, chief economist at Riyad Bank, observed that the growth figures for the second quarter suggested a positive outlook for Saudi Arabia’s non-oil GDP, with expectations of growth surpassing 3 percent.  

He noted that the strong performance of non-oil sectors throughout the quarter continued to drive economic growth and diversification efforts in the country. 

In another report released earlier this month, Savills noted that Riyadh is projected to be among the top 15 fastest-growing cities by 2033, driven by a 26 percent population increase and ongoing government infrastructure spending. 

The analysis highlighted that Riyadh is the only non-Asian city on the list, with its growth attributed to a population surge from 5.9 million to 9.2 million over the next decade. 

In May, S&P Global also indicated that the establishment of free economic zones and the regional headquarters program could further boost foreign direct investment inflows into the Kingdom.