WEEKLY ENERGY RECAP: Demand recovers

Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, US. (Reuters)
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Updated 17 May 2020
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WEEKLY ENERGY RECAP: Demand recovers

  • The physical crude market was still weighed down by millions of barrels stored on tankers worldwide

Brent finished at $32.50 per barrel capping a third consecutive week of gains while WTI topped $29.43 per barrel which was close to a two-month high.

The Brent/ WTI spread has narrowed significantly to $3.07 per barrel, which makes US crude oil exports less competitive to other Brent-related Atlantic basin barrels.

Oil gained despite bearish uncertainties surrounding COVID-19 as economic uncertainty kept market sentiment cautious.

The physical crude market was still weighed down by the millions of barrels being stored on tankers worldwide.

There are more than 200 million barrels of crude oil and petroleum refined products in floating storage as reported by S&P Global Platts.

Still, the crude oil demand outlook is improving as governments ease lockdown measures.

Strong signs of compliance with OPEC+ supply cuts added to the improving market sentiment, especially with large produces within OPEC having already deepened June output cuts which could yet be extended further.

This was in addition to hefty output cuts from producers outside OPEC+ from the US, Canada, Brazil and Norway.

The US rig count continued to fall for the ninth consecutive week, dropping by 34 to 258 rigs, which implies a further imminent decline in the US crude oil production.

China refining capacity posted the first uptick since the coronavirus outbreak after increasing to 13.16 million bpd in April. It is expected to further increase during May and June as the country begins to emerge from a months-long lockdown.

This has given oil traders some hope that demand will begin to recover over the coming weeks keeping in mind that China is
the largest crude oil importer in the world.

The oil demand outlook has improved, particularly in Asia, driven primarily by rising gasoline consumption as citizens get back in their cars.


Indonesia and Thailand join Saudi-led Global Halal Mark alliance

Updated 6 sec ago
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Indonesia and Thailand join Saudi-led Global Halal Mark alliance

RIYADH: Four countries have joined the Global Halal Mark alliance, a new initiative launched by the Saudi Halal Center, following the signing of two agreements with Indonesia and Thailand.

Speaking to Al-Eqtisadiah on the sidelines of the Makkah Halal Forum,  Abdulaziz Al-Rushodi, CEO of the Saudi Halal Center, said the number of countries participating in the alliance is expected to reach 10 by the end of this year. 

He said the initiative aims to unify “Halal” marks around the world and achieve the highest standards of reliability in the sector.

A second initiative announced at the forum is the Halal Academy, established in cooperation with the Islamic University of Madinah, to serve as a global scientific reference contributing to the development of competencies and the halal ecosystem in a comprehensive manner. 

Al-Rushodi also stated that the center is planning to launch the Global Halal Hub initiative, an integrated digital system aimed at unifying halal certifications and facilitating cross-border trade procedures among various countries. 

As part of efforts to support the local industry, the center — according to Al-Rushodi — signed a memorandum of understanding with the Food Manufacturers Association, which includes thousands of national factories, with the aim of empowering Saudi products and qualifying them for export to countries in the Islamic world by granting them the halal mark. 

He said the partnership seeks to encourage local manufacturers to adopt the mark as a core standard for their products, opening broad prospects for global marketing and strengthening the presence of Saudi products in international markets. 

The Saudi Halal Center was established in 2018 and operates under the Saudi Food and Drug Authority. The center grants halal certificates after verifying compliance with Shariah and technical standards and requirements to ensure the reliability of products bearing the “Halal” mark in local and international markets, in addition to issuing the Saudi halal mark. 

The center grants the right to use its trademark, a logo placed on products to indicate that they are subject to oversight and auditing and are compliant with Islamic law. 

The size of the global halal market in 2025 was estimated at approximately $7 trillion, with Saudi Arabia topping the list of the largest investing countries in the sector at a value of SR5.5 billion ($1.4 billion), Yousef Khalawi, Secretary-General of the Islamic Chamber of Commerce and Development, told Al-Eqtisadiah. 

According to Khalawi, the size of the halal market is expected to reach $10 trillion by 2030, amid accelerating growth in global consumer demand and expanding investments in value chains linked to halal industries. 

Saudi Arabia ranks first globally among the most invested countries in the halal sector, having injected investments valued at SR5.5 billion. Malaysia comes second with investments reaching SR4.7 billion, benefiting from its advanced ecosystem of global halal standards, followed by Kuwait in third place with investments amounting to SR4.1 billion. 

The UAE ranked fourth, investing approximately SR3.7 billion in value chains related to food, tourism, and consumer products, while Indonesia placed fifth with investments estimated at SR1.5 billion.