LONDON: Oil prices surged on Tuesday, supported by OPEC-led production cuts, which Saudi Arabia said it would surpass by more than half a million barrels per day (bpd), and by US sanctions against Iran and Venezuela.
Brent crude futures were up almost 3 percent while West Texas Intermediate (WTI) crude oil futures also gained by a similar measure. Markets are tightening because of voluntary production cuts from Jan. 1, led by OPEC and allies including Russia, aimed at forestalling a global overhang.
Saudi Arabia, the world’s top oil exporter and de facto leader of OPEC, said it would reduce crude production to about 9.8 million bpd in March, over half a million bpd more than it had originally pledged. Energy Minister Khalid Al-Falih announced the move in an interview with the Financial Times published on Tuesday as the Kingdom seeks to drive up oil prices to help fund an economic transformation plan.
However, rising US oil production, fighting near Libya’s main oilfield, sanctions on Venezuela and suspense over whether Washington will grant more waivers to import Iranian oil have left markets unsure about broader supply. OPEC cut its forecast for 2019 world oil demand on Tuesday, citing slowing economies and expectations of faster supply growth from rivals, underlining the challenge it faces in preventing a glut. Also on the radar are hopes expressed by US and Chinese officials that a new round of talks, which began in Beijing on Monday, would bring them closer to easing their months-long trade war.
Beijing and Washington are trying to hammer out a deal before a March 1 deadline, without which US tariffs on $200 billion worth of Chinese imports are scheduled to rise to 25 percent from 10 percent. The suspense over the talks continues to affect oil markets.
“Resumption of the US-China trade talks has prompted risk appetite in financial markets, which has also manifested in oil prices gaining strength,” said Abhishek Kumar, senior energy analyst at Interfax Energy in London. “Nevertheless, there needs to be a tangible outcome from the talks for a sustained rally in prices.” But Bank of America warned of a “significant slowing” in global growth, adding that it expects Brent and WTI to average $70 and $59 a barrel respectively in 2019, and $65 and $60 in 2020.
Oil prices jump on Saudi and OPEC cuts
Oil prices jump on Saudi and OPEC cuts
- Markets are tightening because of voluntary production cuts from Jan. 1, led by OPEC and allies including Russia, aimed at forestalling a global overhang
- Saudi Arabia, the world’s top oil exporter and de facto leader of OPEC, said it would reduce crude production to about 9.8 million bpd in March
Qatar’s foreign reserves rise to $71.9bn in January
RIYADH: Qatar’s foreign reserves saw a slight increase in January, reaching $71.95 billion, according to recent data from the Qatar Central Bank.
The figures, released at the end of last month, show a steady rise in the country’s international reserves and foreign currency liquidity.
One notable highlight from the report is a significant 12.8 percent month-on-month rise in Qatar’s gold investments, which now stand at $18.13 billion — marking the highest level ever recorded.
This growth in reserves underscores Qatar’s increasingly robust financial position, which is expected to be mirrored in the December data of other Gulf Cooperation Council countries.
The GCC nations, whose currencies are pegged to the US dollar, typically align their monetary policies with that of the Federal Reserve. Accumulating foreign reserves is crucial for maintaining the stability of these currency pegs, managing liquidity, and safeguarding exchange rates, especially during periods of global financial uncertainty.
However, the report also revealed a decline in investments in foreign treasury bonds and bills, which fell by 9 percent month on month to approximately $30.1 billion — the lowest level in five years. In contrast, the total balances held with foreign banks saw an 18.7 percent increase, reaching $5.92 billion, the highest figure in 10 months.
QCB’s international reserves and foreign currency liquidity also showed a year-on-year increase of 2.65 percent in December, reaching $71.7 billion, as reported by the Qatar News Agency.
This trend of rising foreign reserves is not unique to Qatar. In November, Saudi Arabia’s foreign reserve assets saw a notable 5 percent increase, reaching $463.6 billion, suggesting a regional trend of accumulating financial buffers.
In addition, Qatar’s economic resilience continues to be recognized globally. In March, Fitch Ratings reaffirmed the country’s “AA” credit rating, citing its expanding liquefied natural gas production capacity and high per capita income. The rating reflects Qatar’s strong fiscal position, with one of the highest GDPs per capita globally and a flexible public finance framework that bolsters its economic stability.
An “AA” rating signals very low credit risk and a strong ability to meet financial obligations, even amid potential economic challenges. This rating aligns with a broader regional shift, as Middle Eastern countries diversify their economies to reduce dependence on oil revenues.
