DUBAI: Amin Nasser, president and chief executive of Saudi Aramco, expects a continuing improvement in the global oil market after the most difficult time he has ever seen in the energy business.
Nasser, speaking to Energy Intelligence ahead of a conference this week, said the events of the past six months — when oil demand was severely affected by worldwide economic lockdowns — were unlike any other cyclical downturn in crude markets.
“It’s completely different. My generation hasn’t seen anything like this. I don’t think the world has seen anything like this. If you look at the economic impact and what happened across the world, this is clearly significant,” he said.
But he said there were signs that the worst was over, despite the threat of second wave impacts from the COVID-19 pandemic. “At this stage we see the recovery picking up but, of course, this depends on whether there is a vaccine and how soon it will be available, if there is a second wave and how significant. We could see some back and forth, but there are good signs and we’re expecting to see a better market in the fourth quarter and next year,” he said.
In April daily global demand crashed from around 100 million barrels per day (bpd) to between 75 million and 80 million, and West Texas Intermediate crude, the American benchmark, fell briefly to minus $40 a barrel, meaning producers would pay customers to take oil away.
“It is encouraging to see that the worst is over and demand has sharply recovered from those exceptionally low levels. If you look at the forecasts from the International Energy Agency, they show demand recovering to 96 million by the fourth quarter of this year and 99 million toward the end of next year,” Nasser said.
The recovery was especially strong in Asia, he added. “What we see in Asia, especially China, which is our biggest market, is a strong recovery. In China, almost all demand for oil products is back to pre-COVID levels, except for jet fuel.”
Aramco, which listed on the Saudi Arabia stock market last year to become the world’s most valuable oil company, is monitoring its financial position in light of the revenue decline from low prices.
“We have intensified our cost discipline and are focusing on capital flexibility. We are being very prudent when it comes to capital spending, adhering to strict capital discipline. We are looking at all of our projects and stretching some discretionary ones out where necessary, while maintaining our maximum sustained capacity of 12 million bpd. Also, we are continuing to expand our gas portfolio in the Kingdom,” Nasser said.
“A lot of focus is on capital discipline and maximizing value for our shareholders. That’s what we have demonstrated in the first and second quarters, despite difficult conditions, while meeting our commitment when it came to dividends.”
He added that there were opportunities to “squeeze more value” from its existing assets, especially in downstream operations. Some energy experts have suggested Aramco should spin off or refinance assets such as its pipeline business.
“We’re going to do it right and will make sure what’s executed by this organization [the new Corporate Development unit within Aramco] is in line with our longterm view, the strategy of retaining our core businesses in-house and what can be optimized with our partners. This involves a careful review process that will take some time,” Nasser said.
He will be named Energy Executive of the Year 2020 in a ceremony at the conference next week. “Nasser has guided the world’s largest oil company through a period of considerable change and upheaval in Saudi Arabia itself and in global oil markets more generally,” Energy Intelligence said.
Oil recovering from ‘worst time in my generation,’ says Aramco’s Nasser
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Oil recovering from ‘worst time in my generation,’ says Aramco’s Nasser
- Nasser said there were signs that the worst was over, despite the threat of second wave impacts from the COVID-19 pandemic
- He will be named Energy Executive of the Year 2020 in a ceremony at the conference next week
Egypt’s exports to Arab counties surges 8.7% in 2023, Saudi Arabia tops list
RIYADH: The value of Egyptian exports to Arab countries surged 8.7 percent year on year to reach $13.6 billion in 2023, according to new data.
A statement from Egypt’s Central Agency for Public Mobilization and Statistics revealed that Saudi Arabia topped the list of the highest Arab countries importing from nation during the year, with the value of the African country’s exports amounting to $2.7 billion in 2023.
This falls in line with the significant growth in trade relations, partnerships, joint projects, and development investment between the two countries in recent years.
The statement revealed that the Kingdom was followed by the UAE, with Egyptian exports reaching $2.2 billion, followed by Libya with about $1.8 billion, Sudan with an estimated $984.4 million, and Algeria at $850.3 million.
Regarding the top commodity groups exported to Arab countries during 2023, the agency indicated that vegetables and fruits were exported with a value of $1.3 billion, followed by machinery and electrical appliances with a worth of $1.1 billion.
Furthermore, Egypt’s exports of pearls, precious stones and jewelry to the Arab countries came next, amounting to $1 billion, while exports of fuel, mineral oils and distillation products stood at $753 million.
Meanwhile, the country’s exports of plastics and manufactures totaled $712 million.
Saudi Arabia’s holdings in US treasuries rise to $135.9bn
RIYADH: Saudi Arabia’s holdings in US treasuries increased for the eighth consecutive month in March, reaching $135.9 billion, a rise of 3.66 percent compared to the previous month.
According to official data released by Washington, the Kingdom was ranked 17th among the largest investors in such financial instruments in March.
The report noted that Saudi Arabia’s holdings of US Treasuries were distributed among long-term bonds worth $107.3 billion, representing 79 percent of the total.
On the other hand, the Kingdom’s short-term bonds were worth $28.6 billion in March, accounting for 21 percent of the total value.
In February, the Kingdom’s holdings in US treasuries stood at $131.1 billion, compared to $133.5 billion in January and $132 billion in and December,
The data suggested that Japan was the largest investor in US treasury bonds in March, with holdings totaling $1.18 trillion, representing a rise of 1.16 percent from February.
China and the UK followed, with portfolios valued at $767.4 billion and $728.1 billion, respectively.
Luxembourg and Canada were ranked in the fourth and fifth spots, with treasury holdings amounting to $399.3 billion and $359.1 billion, respectively.
Ireland secured the sixth rank in the list with holdings of $317.8 billion, closely followed by Belgium with portfolios worth $317.1 billion.
The Cayman Islands came in the eighth position with treasury reserves worth $302.9 billion, followed by France and Switzerland, with assets amounting to $283.1 billion and $262.9 billion, respectively.
Taiwan was ranked eleventh on the list, with treasury holdings worth $259 billion.
India came in the twelfth spot with assets amounting to $240.6 billion, followed by Brazil and Singapore, which had holdings worth $227.1 billion and $208 billion, respectively.
Earlier this month, a report released by the Saudi Central Bank, also known as SAMA, revealed that international reserve assets declined by 2 percent in April to SR1.66 trillion ($440 billion) compared to the previous month.
However, the Kingdom’s foreign reserve assets jumped 3 percent in April compared to the same period of the previous year.
Fintech firm Hala gets SAMA approval to offer debt-based crowdfunding solutions
RIYADH: Saudi businesses are set to gain access to new crowdfunding solutions as Hala Payments Co. has received licensing approval from the Kingdom’s central bank to offer debt-based products.
The Saudi-based fintech platform offers inbound and outbound payment options to small and medium enterprises, with over 50,000 merchants currently using its services, according to its website.
With this approval, the total number of companies licensed to engage in this activity in the Kingdom has reached 11, while authorized finance companies now stands at 62, stated the Saudi Central Bank in a press release.
Debt-based crowdfunding provides a pathway for projects or businesses in need of funding. Instead of relying on a single lender, borrowers secure loans from multiple investors.
This model is particularly advantageous for small businesses or individuals who may face challenges obtaining loans from traditional banks. Essentially, it serves as a dual opportunity: borrowers receive the necessary funding, while investors earn returns by directly lending money.
In January, SAMA issued a license to Thara, a debt crowdfunding platform, to operate in the Kingdom. The fintech firm specializes in financing real estate development projects, connecting individual and institutional investors with investment opportunities through Murabaha products.
This decision to issue licenses falls within the framework of the central bank’s efforts to support and empower the finance sector, aimed at enhancing the effectiveness and flexibility of transactions, added SAMA.
It also seeks to foster innovation and promote it, with the objective of enhancing the level of financial inclusion in the Kingdom and extending such services to all segments of society.
SAMA emphasized the importance of dealing with licensed or authorized financial institutions, which can be verified by visiting its official website.
The central bank warned that it may take any necessary actions, such as conducting on-site visits, meeting with the company’s executives, and reviewing its regulations, procedures, and records, to verify that the debt-based crowdfunding company has met all its requirements.
It added that the license can be canceled if the firm requests cancellation, provides false information, violates rules or laws, delays starting activities for six months, or suspends operations for over three months without SAMA’s approval.
Mawani issues new licenses to strengthen ports sector in Saudi Arabia
RIYADH: The Kingdom’s seaport activities and logistics sector are set to improve, with the Saudi Ports Authority issuing new licenses in multiple areas of operation.
In a press statement, the authority, also known as Mawani, said that issuing these permits aligns with its goal of developing port business in the Kingdom with high efficiency and quality.
Mawani revealed that permits have been issued in various areas of operations, including pilotage, maritime support, marine traffic signals, and ship repair and routine maintenance.
The statement added that licenses were also issued for container handling and port storage services, and maritime consultancy activities.
The issuance of these new permits is part of Mawani’s broader strategy to position Saudi Arabia as a global logistics hub by the end of this decade.
Saudi Arabia’s National Transport and Logistics Strategy seeks to increase the sector’s contribution to the Kingdom’s gross domestic product to 10 percent from the current 6 percent by 2030.
In the statement, Mawani further revealed that additional licenses were given to activities like bunkering ships in terminals, waste recycling and ship waste management, as well as, hydrographic surveying, and port work training.
In January, the authority announced that it established new ship anchorage areas in the Kingdom’s King Fahd Industrial Port in Yanbu.
According to a statement, newly established docking zones will help modernize several port logistical services, including delivering ships with supplies and fuels, said Mawani in a statement.
The body also noted that these new anchorage zones will increase the terminal’s operational performance indicators and reduce ship docking times.
In December 2023, Mawani garnered 79.01 points in the UN Conference on Trade and Development’s Liner Shipping Connectivity Index for the fourth quarter of 2023, compared to 77.66 points issued in the previous three months.
Moreover, Saudi Arabia also progressed in container handling, moving from 24th to 16th in the Lloyd’s List One Hundred Ports rankings.
Similarly, the Kingdom climbed 17 places in the World Bank’s Logistics Performance Index, securing the 38th position out of 160 countries.
Oil Updates – prices rise on slower US inflation, strong demand
SINGAPORE: Oil prices extended gains from the previous session on Thursday on signs of stronger demand in the US, where data showed slower inflation than markets expected, bolstering the argument for an interest rate cut that could drive greater consumption, according to Reuters.
Brent futures rose 32 cents, or 0.4 percent, to $83.07 a barrel at 9:20 a.m. Saudi time, while US West Texas Intermediate crude gained 31 cents, or 0.4 percent, to $78.94.
“A more tamed read for US April inflation and a far weaker-than-expected read in US retail sales seem to offer room for the Fed to consider earlier rate cuts, with market expectations leaning more firmly for policy easing to kickstart in September this year,” said IG market strategist Yeap Jun Rong.
“The larger-than-expected drawdown in US crude inventories for last week also offered some calm, while geopolitical tensions continue to rock on in the Middle East.”
US consumer prices rose less than expected in April in a boost to financial market expectations for a September rate cut by the Federal Reserve, which could temper dollar strength and make oil more affordable for holders of other currencies.
Elsewhere, US crude oil, gasoline and distillate inventories fell, reflecting a rise in both refining activity and fuel demand, showed data from the Energy Information Administration.
Crude inventories fell 2.5 million barrels to 457 million barrels in the week ended May 10, the EIA said, versus the 543,000 barrel consensus analyst forecast in a Reuters poll.
Signs of slowing inflation and stronger demand were supporting prices, ANZ Research also said in a client note, as is geopolitical risk, which it noted remains elevated.
In the Middle East, Israeli troops battled Hamas militants across Gaza, including Rafah, which had been a civilian refuge.
Ceasefire talks mediated by Qatar and Egypt are at a stalemate, with Hamas demanding an end to attacks and Israel refusing until the group is annihilated.
Gains were constrained after the IEA trimmed its forecast for 2024 oil demand growth, widening the gap between its view and that of producer group OPEC.
Global oil demand this year will grow by 1.1 million barrels per day, the IEA said, down 140,000 bpd from its previous forecast, largely due to weak demand in developed nations of the Organization for Economic Co-operation and Development.
