DUBAI: The price of oil surged above $80 a barrel on Tuesday amid soaring demand from global economies and increasingly tight supply.
Brent crude, the global benchmark, jumped past the psychologically significant landmark for the first time in three years, after five days of rising prices.
Oil analysts believe the surge could have a long way to go. Christyan Malek, head of oil and gas at US bank JP Morgan, told Arab News: “The bull case suggests that oil could hit more than $100 a barrel by 2023, though it could reach that level within the next six to 12 months.”
Another US banking giant, Goldman Sachs, this week forecast a price of $90 a barrel for Brent by the end of this year.
Oil has risen in price by more than 90 percent over the past year as the output strategy of OPEC+ — the oil alliance led by Saudi Arabia and Russia — drained the global oil glut that depressed prices in 2020.
Global crude inventories that ballooned during the pandemic have shrunk to their lowest levels since January 2020 as the biggest oil consumers, the US and China, fuel their recovery.
Several other factors are also behind the recent run. Robin Mills, chief executive of consultancy Qamar Energy, said it was down to “gas shortages and revived demand colliding with US hurricanes and maintenance delays.”
Adding to the upward pressure on prices, oil demand will grow sharply in the next few years as economies recover from the pandemic, OPEC forecast in its World Oil Outlook published on Tuesday.
“Energy and oil demand have picked up significantly in 2021 after the massive drop in 2020,” OPEC Secretary-General Mohammad Barkindo said. “Continued expansion is forecast for the longer term.”
Oil use will rise by 1.7 million barrels per day in 2023 to 101.6 million bpd, OPEC said, adding to robust growth already predicted for 2021 and 2022, and pushing demand back above the pre-pandemic 2019 rate.
The organization said the world must continue investing in oil production to avert an energy shortage, despite the transition to renewables. Upstream oil capital spending dropped by nearly 30 percent to about $240 billion last year because of the pandemic.
“It is clear that underinvestment remains one of the great challenges for the oil industry,” Barkindo said. “Without the necessary investments, there is the potential for further volatility and a future energy shortfall.”
Nevertheless, OPEC is upbeat about its prospects. “Oil is still expected to retain its No. 1 position in the energy mix,” Barkindo said.
Price of oil surges past $80-a-barrel landmark
https://arab.news/2t8dm
Price of oil surges past $80-a-barrel landmark
- OPEC urges investment in production
Closing Bell: Saudi main market edges up to 11,458 points
RIYADH: Saudi Arabia’s Tadawul All Share Index closed Wednesday at 11,458.11, up 0.67 percent, or 76.28 points, driven by selective buying in real estate, insurance, and healthcare stocks.
The Nomu Parallel Market Index also finished higher, rising 0.44 percent to 23,855.01, while the MSCI Tadawul 30 Index added 0.69 percent to close at 1,543.87.
Trading activity was moderate, with total volume reaching 280 million shares and a traded value of SR6.32 billion ($1.68 billion).
On the gainers’ side, Marketing Home Group for Trading Co. surged 8.97 percent to SR59.50, leading advances. Al Ramz Real Estate Co. rose 6.42 percent to SR68.75, while Bupa Arabia for Cooperative Insurance Co. added 5.64 percent to close at SR164.80.
Al Aziziah REIT Fund gained 5.22 percent to SR4.23, and Alistithmar AREIC Diversified REIT Fund advanced 4.19 percent to SR7.70.
On the downside, Consolidated Grunenfelder Saady Holding Co. fell 4.27 percent to SR10.10. Thob Al Aseel Co. declined 4.01 percent to SR3.83, while National Gypsum Co. slipped 3.10 percent to SR15.92.
Tabuk Agricultural Development Co. ended the session down 2.65 percent at SR7.72, and Tourism Enterprise Co. fell 2.54 percent to SR13.81.
On the announcement front, Al Moammar Information Systems Co. said it has executed the investment agreement to acquire a 15 percent stake in the “Eltizam” electronic insurance platform, with a total investment value of SR19.5 million.
The company said the subscription and purchase agreement was signed on Jan. 28 between Al Moammar Information Systems and Eltizam Electronic Insurance Brokerage Co., following the board’s earlier approval of the transaction.
Shares of Al Moammar Information Systems closed at SR180.50, up 1.40 percent.
In a separate disclosure, Al Moammar Information Systems Co. announced the latest developments related to its participation as a founding shareholder in the establishment of a Shariah-compliant digital bank in Saudi Arabia, known as Vision Bank.
The company said a subscription agreement for a capital increase was jointly executed on Jan. 28 as part of a broader plan to raise Vision Bank’s capital to SR3 billion from SR1.5 billion.
Al Moammar Information Systems said the value of its subscription amounts to SR23.75 million, based on a pre-money valuation of SR3.2 billion for Vision Bank.
Alinma Bank announced that its board of directors has recommended increasing the bank’s capital by 20 percent through the capitalization of reserves and retained earnings via the issuance of bonus shares.
Under the proposal, shareholders would receive one bonus share for every five shares held, raising the bank’s capital to SR30 billion from SR25.0 billion.
The bank said the capital increase is intended to strengthen financial solvency and support future growth, subject to approvals from regulators and the extraordinary general assembly.
Alinma Bank said it has received a no-objection from the Saudi Central Bank.
Shares of Alinma Bank closed at SR28.26, up 3.21 percent.
