DUBAI: Energy ministers from OPEC+, the oil alliance led by Saudi Arabia and Russia, are preparing for a crucial meeting on Thursday amid signs that the recovery in global oil markets is slowing down because of a resurgence in the COVID-19 pandemic.
Projections for 2020 crude demand have been downgraded in the past couple of days by two authoritative sources — the Organization of Petroleum Exporting Countries (OPEC) itself, and the International Energy Agency (IEA).
In addition to new COVID lockdowns, the IEA blamed teleworking and weak air travel for the downturn in crude demand in “even more fragile” markets.
Brent crude, the global benchmark, has lost about 10 per cent in the past two weeks but has mostly stayed above the $40 per barrel level.
According to OPEC sources, ministers are considering whether to take further proactive measures now on oil supply to head off a possible excess this autumn, or to stick with the regime of cuts, compliance and compensation that has brought oil supply closer to rebalance.
The price of crude has more than doubled since the market chaos of April before the current OPEC+ regime took effect.
Traders were spooked by figures this week that showed the UAE, one of the staunchest advocates of the compliance policy, missed the OPEC+ targets by a wide margin.
Abu Dhabi said the lapse was temporary because of increased domestic seasonal demand, and promised to compensate next month. Overall compliance with the cuts has been unprecedented.
Energy analyst Robin Mills, chief executive of Qamar Energy consultancy, said he believed OPEC+ would “hold the line” at the current level of cuts.
Crunch meeting of oil alliance over cuts in output
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Crunch meeting of oil alliance over cuts in output
- Projections for 2020 crude demand have been downgraded in the past couple of days
Up to $600m in additional tariffs on Saudi exports to the US
RIYADH: Gulf exports have become targets of US President Donald Trump’s tariffs, which he raised from 10 percent to 15 percent on all countries.
The increase comes after the US Supreme Court ruled that the legal basis Trump had used to impose earlier tariffs was unlawful.
Previously, Gulf countries were among the few that had not raised their tariffs above 10 percent, while many other countries, most notably China, had already been subject to higher tariffs. However, with this latest increase, the Gulf states will be among those affected.
According to the financial analysis unit of Al-Eqtisadiah newspaper, Gulf exports to the US in 2024 amounted to about $26.2 billion, with Saudi Arabia accounting for roughly half of that, at $12.7 billion. These exports are subject to potential additional tariffs of SR637 million ($169 million).
It is likely that tariffs on Saudi exports will grow from $1.3 billion annually to $1.9 billion, a rise of 50 percent, following Trump’s recent increase.
Customs duties on Gulf exports will also increase, from $2.6 billion annually to $3.9 billion.
In 2024, Gulf exports are distributed as follows: $7.5 billion from the UAE, $1.8 billion from Qatar, and $1.6 billion from Kuwait, as well as $1.3 billion from Oman, and finally, $1.2 billion from Bahrain.
Gulf trade with the US in 2024 reached approximately $86 billion, comprised of $26.2 billion in exports and approximately $60 billion in imports, resulting in a Gulf trade deficit of $33.5 billion.
Trump responds to Supreme Court ruling
US President Donald Trump raised the global tariffs from 10 percent to 15 percent in response to the US Supreme Court ruling that his previous tariff implementation mechanism was unlawful.
Trump said in a post on his Truth Social account today: “As President of the US, I will, effective immediately, raise the global tariffs imposed on countries that have been taking advantage of the US for decades with impunity (until I took over!) to the legally permitted and tested level of 15 percent.”
Hours after the Supreme Court ruling on Feb. 20, Trump imposed a 10 percent global tariff on foreign goods, a move aimed at maintaining his trade agenda.
Trump had expressed his displeasure with the Supreme Court’s decision to overturn the tariffs imposed by his administration, asserting that the ruling would not restrict him. He vowed to impose tariffs far exceeding those struck down by the court, indicating that he had stronger alternatives to tariffs, raising questions about his future trade strategy.
The US Supreme Court struck down Trump’s sweeping global tariffs, undermining his signature economic policy and inflicting his biggest legal defeat since returning to the White House.
By a six-three vote, the court ruled that Trump exceeded his authority by invoking the federal emergency powers law to impose his reciprocal tariffs worldwide, in addition to targeted import duties that the administration claims are intended to combat fentanyl smuggling.
