LONDON: Oil prices hit their lowest in more than a year on Thursday amid worries about an oversupplied market and future demand following a US interest rate hike.
Global stock also fell after the US Federal Reserve raised rates and maintained most of its guidance for further increases over the next two years.
Some Gulf stock markets were also dragged lower by the news from the Fed, with Dubai retreating about 1.4 percent and Saudi shares down by about 1.7 percent.
OPEC and other producers including Russia this month pledged to cut their output by 1.2 million barrels per day in a bid to support flagging prices.
But these cuts do not kick in until next month and comes on the heels of near record production in Saudi Arabia, the US and Russia.
Saudi Energy Minister Khalid Al-Falih said he expected global oil stocks to decline by the end of the first quarter, but said the market was not being driven by supply and demand as much as speculation, the strength of the US dollar and other geopolitical factors.
“Some of the elements in oil’s bullish story have fallen apart,” Giovanni Staunovo, an analyst at UBS Group in Zurich, told Bloomberg. “US production is higher than expected, concerns over spare capacity didn’t materialize, and the OPEC+ cuts don’t start until January. The correction in equities triggered by the Fed didn’t help either.”
US light crude oil fell 4.9 percent, to a low of $45.82, before recovering later while Brent crude fell by as much as 4.5 percent to its lowest since September 2017.
The decline in prices on Thursday followed a market rally the day before.
“Wednesday’s recovery was short-covering,” said Xi Jiarui, chief oil analyst at consultancy JLC, Reuters reported.
“Investors quickly moved their attention to deteriorating fundamentals in the oil markets, including more signs of slowing economic growth next year, record production and the lack of confidence with OPEC’s pledge to curb production.”
OPEC also plans to release figures detailing voluntary output cut quotas for its members and allies, OPEC Secretary-General Mohammad Barkindo said in a letter seen by Reuters on Thursday.
“In the interests of openness and transparency, and to support market sentiment and confidence, it is vital to make these production adjustments publicly available,” Barkindo told members in the letter. “I would urge Your Excellencies to kindly make positive announcements reinstating your countries’ commitment to implementing the agreed decisions. This is also vital to underpin trust in our decisions and to buttress ourselves from any naysayers who may doubt our commitment.”
Oil tumbles to lowest in a year on Fed hike
Oil tumbles to lowest in a year on Fed hike
- Oil prices hit their lowest in more than a year on Thursday
- Some Gulf stock markets were also dragged lower by the news from the Fed
Closing Bell: Saudi main index extends gains as market opens wider to foreign investment
RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Monday, gaining 153.61 points, or 1.38 percent, to close at 11,321.09.
The total trading turnover of the benchmark index was SR5.85 billion ($1.56 billion), as 207 of the listed stocks advanced, while 55 retreated.
The MSCI Tadawul Index increased, up 21.20 points or 1.41 percent, to close at 1,524.18.
The Kingdom’s parallel market Nomu gained 278.13 points, or 1.17 percent, to close at 24,013.03. This comes as 43 of the listed stocks advanced, while 29 retreated.
The best-performing stock was Saudi Pharmaceutical Industries and Medical Appliances Corp., with its share price surging by 7.26 percent to SR28.94.
Other top performers included Rasan Information Technology Co., which saw its share price rise by 6.51 percent to SR144, and Knowledge Economic City, which saw a 6.25 percent increase to SR13.09.
On the downside, the worst performer of the day was Najran Cement Co., whose share price fell by 2.11 percent to SR6.49.
Almasane Alkobra Mining Co. and Saudi Cable Co. also saw declines, with their shares dropping by 2 percent and 1.88 percent to SR103.10 and SR166.80, respectively.
On the announcement front, Riyad Bank has announced its annual financial results for 2025, with the total income from special commission of financing reaching SR24.1 billion, while net income from special commission of financing amounted to SR12 billion.
In a statement on Tadawul, the bank said: “Net income increased by 11.7 percent mainly due to an increase in total operating income and a decrease in total operating expenses.”
The bank further noted that the rise in total operating income was primarily driven by increased revenue from fees and commissions, trading activities, special commissions, gains on non-trading investments, and other operating sources. This growth was partially tempered by declines in exchange and dividend income.
“Net provision of expected credit losses and other losses decreased by 15.8 percent due to a decrease in impairment charge of credit losses and impairment charge for other financial assets, partially offset by an increase in impairment charge for investments,” it added.
RIBL’s share price closed at SR18.18 on the main market, marking a 1.43 percent increase.
