JEDDAH: The Organization of the Petroleum Exporting Countries’ (OPEC) job to restore the balance of the oil market just got harder as more output is expected to come from shale oil producers in North America with oil prices settling now at around $50.
OPEC is not sure that the market will rebalance this year if more production from shale oil producers can offset the group’s efforts to bring down global inventories, an OPEC source told Arab News.
The source said that there are risks to the deal from supply from other OPEC members such as Libya and Nigeria that are exempted from the production cut targets, due to their security issues and unstable production situation.
OPEC is now trying to conduct more studies on the impact of shale oil in the market and the findings of these studies will be presented to the ministers of the committee that monitors the agreement to cut production in their next meeting, the source, who asked not to be named because he is not authorized to speak to media, added.
The committee known as the Joint Ministerial Monitoring Committee, or JMMC, will probably convene in Vienna next month to review market developments since the last meeting in Russia in July, the source said. Shale crude oil production from seven major US oil plays is expected to reach a record in September. The US Energy Information Administration (EIA) said on Aug. 14 in its monthly drilling productivity report that it expects shale oil production to climb by 117,000 barrels per day (bpd) in September.
The EIA said last week that US production in the week ending Aug. 11 hit 9.5 million bpd, a level not seen since 2015, according to Bloomberg’s estimates. “$50 a barrel is still a pretty critical number and that number is going to be even more critical as we move into next year,” Tortoise Capital Advisors’ Rob Thummel told Bloomberg on Aug. 2.
Some analysts, however, expect shale oil production not to grow by as much as many in the industry believe that the cost of production for shale is also increasing. Standard Chartered’s analyst Steve Brice told Bloomberg TV on Aug. 22 that shale oil will stabilize this year at current levels unless oil prices increased from current levels.
Balancing the oil market could be jeopardized by shale
Balancing the oil market could be jeopardized by shale
Closing Bell: Saudi benchmark index closes lower at 10,540
RIYADH: Saudi equities ended Wednesday’s session lower, with the Tadawul All Share Index falling 55.13 points, or 0.52 percent, to close at 10,540.72.
The sell-off was mirrored across other indices, with the MSCI Tadawul 30 Index retreating 5.79 points, or 0.41 percent, to close at 1,393.32, while the parallel market Nomu slipped 74.56 points, or 0.32 percent, to 23,193.21.
Market breadth remained firmly negative, as decliners outpaced advancers, with 207 stocks ending the session lower against just 51 gainers on the main market.
Trading activity moderated compared to recent sessions, with volumes reaching 123.5 million shares, while total traded value stood at SR2.72 billion ($725.2 million).
On the sectoral and stock level, Al Moammar Information Systems Co. led the gainers after surging 9.96 percent to close at SR172.30, extending its rally following a series of contract announcements tied to data center and IT infrastructure projects.
Al Masar Al Shamil Education Co. climbed 4.89 percent to SR27.48, while Naqi Water Co. advanced 3.36 percent to SR58.50. Al Yamamah Steel Industries Co. and Al-Jouf Agricultural Development Co. also posted solid gains, rising 3 percent and 2.86 percent, respectively.
Losses, however, were concentrated in industrial names. Saudi Kayan Petrochemical Co. fell 3.67 percent to SR4.73, while Makkah Construction and Development Co. slid 3.44 percent to SR80.
Saudi Tadawul Group Holding Co. retreated 3.28 percent to SR147.50, weighed down by broader market weakness, and Saudi Cable Co. declined 3.18 percent to SR143.
Alkhaleej Training and Education Co. rounded out the top losers, shedding just over 3 percent.
On the announcement front, BinDawood Holding announced the signing of a share purchase agreement to acquire 51 percent of Wonder Bakery LLC in the UAE for 96.9 million dirhams, marking a strategic expansion of its food manufacturing footprint beyond Saudi Arabia.
The acquisition, which remains subject to regulatory approvals, is expected to support the group’s regional growth ambitions and strengthen supply chain integration.
BinDawood shares closed at SR4.68, up 0.43 percent, reflecting a positive market reaction to the overseas expansion move.
Meanwhile, Al Moammar Information Systems disclosed the contract sign-off for the renewal of IT systems support licenses with the Saudi Central Bank, valued at SR114.4 million, inclusive of VAT.
The 36-month contract is expected to have a positive financial impact starting from fourth quarter of 2025, reinforcing MIS’s position as a key technology partner for critical government institutions. The stock surged to the session’s limit making it the top gainer.
In a separate disclosure, Maharah Human Resources confirmed the completion of the sale of its entire stake in Care Shield Holding Co. through its subsidiary, Growth Avenue Investments, for a total consideration of SR434.3 million.
The transaction involved the transfer of 41.36 percent of Care Shield’s share capital to Dallah Healthcare, with Maharah receiving the full cash proceeds.
Despite the strategic divestment, Maharah shares closed lower, ending the session at SR6.12, down 1.29 percent.
