JEDDAH: Aside from Igor Sechin, the CEO of Russia’s largest oil company Rosneft, it seems that the majority of the attendees at the St. Petersburg International Economic Forum in Russia last week are satisfied with the latest deal made in Vienna by the world’s major oil producers.
The Organization of the Petroleum Exporting Countries (OPEC) agreed on May 25 with 10 producers from outside the group led by Russia to extend their production cuts of 1.8 million barrels per day (bpd) for another nine months, ending in March next year.
It was clearly stated by many officials and oil executives during the forum that the cooperation between OPEC and non-OPEC at this scale was unprecedented. Moreover, this cooperation now is expected to last beyond March 2018, according to statements from Saudi Energy Minister Khalid Al-Falih and his Russian counterpart Alexander Novak.
The support OPEC is getting from Russia is huge and this comes from President Vladimir Putin himself, who assured Al-Falih after two meetings that the cooperation will continue even if the deal is over, according to the Saudi minister.
The Russian government values the deal with OPEC and sees it as a key factor in saving oil prices. “If we had not extended the deal, I believe we would have seen the price fall, not 8 percent, which you mentioned, but probably 50 percent,” Novak told Bloomberg television in an interview during the event.
The nine-month extension of the output caps was “optimal,” and participants are still able to extend or shorten the agreement if necessary, Novak said in the interview.
As for oil prices, Novak said that $50 a barrel is “good for the market.” He also expects to see oil trading at between $50 and $60 a barrel as demand grows and inventories fall. But he added that the main “task is to remove the inventory surplus.”
However, the CEO of Rosneft said OPEC oil producers and their allies could be wasting their efforts by cutting output because rising US production threatens to deliver a wave of new supply and could add up to 1.5 million bpd to world oil output next year.
“The agreement between OPEC and non-OPEC countries, with the biggest contribution from Saudi Arabia and Russia, has given the market a breather but it is hard to consider these as systematic measures that would lead to long-term stabilization,” Sechin told the forum on June 2.
Sechin still views the agreement and its impact on the oil market as “positive,” according to an interview with the Financial Times on June 4. Yet, Rosneft would step up production if the agreement comes to a sudden end, he told the newspaper.
“Well, if the question is how OPEC is going to exit from these arrangements abruptly, we will also be prepared. If something goes wrong, we will not let them occupy our markets. We will defend ourselves,” the newspaper quoted him as saying.
OPEC deal goes under spotlight in St. Petersburg
OPEC deal goes under spotlight in St. Petersburg
Saudi stocks rise above 11,000 as energy shares lead gains
RIYADH: Saudi Exchange’s benchmark Tadawul All Share Index climbed above 11,000 on Sunday, led by energy and materials stocks despite geopolitical uncertainty from ongoing tensions between US-Israel and Iran across the region.
As of 12:30 p.m. Saudi time, the benchmark index had advanced 224.80 points, or 2.09 percent, to 11,001.12. The MSCI Tadawul Index rose 26.96 points, or 1.84 percent, to 1,488.86, while the Kingdom’s parallel market, Nomu, slipped 0.05 percent to 22,485.78.
The gains came as Gulf markets reacted to heightened tensions between the US-Israel alliance and Iran, prompting investors to shift toward sectors more resilient to higher oil prices and supply disruptions.
Saudi Aramco was among the strongest performers, with its share price rising 4.56 percent to SR27.06 as of 12:30 p.m. Saudi time.
Speaking to Arab News, Tony Hallside, CEO of STP Partners, said: “Energy producers and oilfield services typically outperform on higher crude, while the pain concentrates in airlines, shipping, petrochemicals, and any sector with high fuel or logistics intensity.”
Century Financial chief investment officer Vijay Valecha told Arab News that energy companies such as Saudi Aramco could see their share prices rise under current market conditions.
“At the sector level, energy and petrochemical companies are likely to remain relatively resilient due to stronger pricing. In contrast, sectors such as real estate, consumer discretionary, banking, and capital markets would likely see short-term volatility and profit-taking as investors adopt a more cautious stance,” said Valecha.
He added that elevated energy prices could also increase global inflationary pressures and create uncertainty in supply chains, potentially weighing on broader economic activity.
Stock exchanges across the Gulf Cooperation Council also showed signs of recovery on March 6, with the Bahrain Bourse edging up 0.24 percent and the Muscat Stock Exchange gaining 1.44 percent.
The Qatar Stock Exchange, however, declined 0.15 percent.
UAE equities were closed on Sunday due to an official holiday.
On March 6, the Dubai Financial Market index fell for a fifth straight session, down 3.2 percent, or 197.49 points, to 5,917.22. It declined 9.01 percent for the week.
The Abu Dhabi Securities Exchange general index fell for a seventh consecutive session, dropping 1.4 percent, or 141.49 points, to 9,903.36 on March 6.
“UAE equities ended the week lower as the widening conflict involving the US, Israel, and Iran continued to weigh heavily on risk sentiment. Dubai and Abu Dhabi stocks slid further upon reopening on Wednesday, pressured by regional tensions after the two-day break,” Valecha said in a separate statement.
He added: “Banking and property stocks have been the largest drags as investors reassessed and questioned whether the market had priced in too much resilience. The shift in perception followed missile and drone attacks on Dubai over the weekend, which undermined the idea that the city remained insulated from global tensions.”
