Majority of energy executives expect world to reach net-zero by 2060

In February, CEO of Saudi Aramco, Amin Nasser, said the company is eyeing continuity in the production of all types of energy including oil and gas, along with renewables. (File)
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Updated 30 March 2024
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Majority of energy executives expect world to reach net-zero by 2060

  • This view is most strongly held among oil and gas business leaders, survey by Bain & Co. shows

RIYADH: Around 62 percent of executives in the energy sector expect the world to reach net-zero emissions by 2060 or later, a study showed.

The survey, carried out by management consulting firm Bain & Co., revealed that this view is consistent across most regions and is most strongly held among oil and gas business leaders. 

“Despite ENR (energy and natural resources) companies’ continued investments in decarbonization, about 62 percent of executives now anticipate the world will reach net-zero by 2060 or later, up from 54 percent in last year’s survey,” said Bain & Co. 

Most of the participants in the survey pointed out the financial viability of energy transition projects as a major concern.  

According to these ENR executives, the greatest obstacle to scaling up their transition-oriented businesses is finding enough customers willing to pay higher prices to create sufficient return on investment.  

“Energy transition looks slower as it becomes even more difficult to ensure adequate investment returns and progress diverges across a fragmenting world,” said the report.  

It added: “In our view, the direct impact of higher interest rates on the cost of transition projects is one of the most important stories of 2023 and is likely shaping executives’ perspective on this issue.”   

The survey also indicated that taxes and carbon pricing, along with government subsidies, are the top levers which will influence customer behavior. 

Middle East executives confident about energy transition-related businesses

The report highlighted that executives in the Middle East, Asia-Pacific, and Latin America are feeling more optimistic about the prospects of their transition-oriented growth businesses.  

The survey results also revealed that ENR officials in these regions believe transition-related businesses will bring positive impacts to their company’s valuation and profits by 2030.  

Speaking to Arab News, Paul Sullivan, non-resident senior fellow of the Global Energy Center at the Atlantic Council also shared similar views and noted that countries in the Middle East have all the potential to spearhead the transition journey.  

“GCC countries may in the end be more successful at some transitions because they need the transitions to help economic diversification and economic diplomacy. And mostly they can pay for the energy transition with their oil and gas revenues. Without those revenues, it would be near impossible to do this,” said Sullivan.  

In February, Saudi Aramco CEO Amin Nasser said the company is eyeing continuity in the production of all types of energy including oil and gas, along with renewables. 

Two months earlier, Nasser said the amount of renewable energy coming to the international market falls short of fulfilling the rising demand. 

He said more investments are needed in the oil and gas sector to ensure a smooth energy transition. 

The Bain & Co. report said energy executives consider North America as the most attractive region for transition-related investments, but the stability of government policies remains a concern.  

According to the report, over 70 percent of the executives worldwide who took part in the survey revealed that reducing policy uncertainty would very significantly improve their ability to scale up transition-oriented businesses. 

“Many of the programs started by governments in the recent past and present may not survive the political changes that could be coming. Many governments are listening to their voters and are already backing down from some energy transition measures,” added Sullivan.

Jiyas Jamal, an Indian lawyer who is also a climate activist, shared similar views, and said energy transition is happening slower, but countries all across the globe have started taking the climate issue seriously.  

“I do agree that energy transition is happening slowly. However, there is a growing awareness all over the world regarding the issue of climate change. Even though financial viability is a major concern among ENR companies, the trend is reversing now, and several big names in the sector, especially in the Middle East region are seriously investing in renewable projects,” Jamal told Arab News.

The impact of AI on energy transition 

The report said advanced technologies, such as artificial intelligence, have a crucial role to play as the world sails toward a sustainable future.  

According to the survey, the share of ENR executives who believe AI and digital processes will have a significant effect on their businesses by 2030 increased from 56 percent in 2023 to 65 percent in 2024. 

BACKGROUND

• Most of the participants in the survey pointed out the financial viability of energy transition projects as a major concern.

• According to these ENR executives, the greatest obstacle to scaling up their transition-oriented businesses is finding enough customers willing to pay higher prices to create sufficient return on investment.

• The Bain & Co. report said energy executives consider North America as the most attractive region for transition-related investments.

Improving maintenance, production, and the supply chain are currently among the most promising generative AI applications across ENR sectors, the report added.  

However, executives are skeptical that generative AI will play a significant role in reducing emissions due to its significant energy requirements. 

“AI could be an increasingly bigger part of the transition in many countries and across countries. But AI is a big consumer of energy. This energy consumption needs to be considered as a factor in the energy transition and for climate and environmental issues in the future,” said Sullivan.  

He added: “No energy is clean over its supply chains and life cycles. No energy is free — contrary to some of the ‘renewables’ salespersons. No energy is truly renewable when the technologies reach their lifetimes and need to be decommissioned. So, even the concept of renewable is up to question and is more of a continuum than an absolute.” 

Energy transition: the funding dilemma 

Talking about the energy transition progress in the global north and south, Sullivan said funding is an issue for all countries.  

He opined that richer countries have more capital that can be put into the transition efforts, but they are excessively relying on tax breaks and subsidies.

“Developed countries have built up massive public debts and yet many feel free to spend tens of billions of mostly borrowed money increasing their debt to go forward with the energy transition. This is not sustainable at all,” noted Sullivan.

He added: “Many leaders in the poorer parts of the world do not have climate as a top issue and the energy transition is very expensive. For poorer and less developed countries, they have many other more pressing problems to deal with, such as poverty, education, health, and other crushing economic and political issues.”  

For his part, Jamal concluded that energy transition is one of the crucial agendas the world is facing, and it should be achieved effectively, even though a little delay happens in the process.  

“The world is facing the heat of climate change. All the countries should try to achieve their net-zero targets for our future generations. Developed nations should continue lending their helping hand to the least developed, as this is an issue which can be addressed with cooperation,” he said.


Point-of-sale spending in Saudi Arabia hits record $16bn, SAMA reveals

Updated 24 May 2024
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Point-of-sale spending in Saudi Arabia hits record $16bn, SAMA reveals

RIYADH: Food and beverages transactions helped drive point-of-sale payments in Saudi Arabia to a record SR59.68 billion ($15.91 billion) in March, official data has revealed.

Figures released by the Saudi Central Bank, also known as SAMA, show an 8 percent annual increase in spending across all sectors, with outlays during the holy month of Ramadan likely responsible for driving the uptick, alongside an expanding market with flexible payment options.

Spending on food and beverages in March made up the largest portion, accounting for 17 percent of total payments for the month. 

Expenditures on restaurants and cafes, along with miscellaneous goods and services, each represented 12 percent of overall spending.

In February, Redseer Strategy Consultants predicted a heightened eagerness among consumers in Saudi Arabia to explore new attractions and destinations during Ramadan.

Their survey, probing changes in shopping behavior for Ramadan 2024 compared to the previous year, revealed that 62 percent of Saudi respondents planned to increase their spending, surpassing the 48 percent of respondents from the UAE.

The report highlighted that this surge is driven by factors related to platforms and experiences, particularly flexible payment options and the launch of exclusive products of high quality.

The research showed that in the UAE, where the market has matured, consumers are placing a growing emphasis on affordability, prioritizing products with the lowest prices.

Factors such as product variety, fast delivery, and quality no longer serve as significant brand differentiators, as the market has leveled the playing field.

Conversely, in Saudi Arabia, a market experiencing growth, there is a notable focus on platform and experience-related aspects. Flexible payment options and strong customer support are becoming increasingly important, indicating a shift in consumer preferences.

According to data from SAMA, the primary drivers of growth during this period were increased spending on miscellaneous goods and services, which include personal care supplies and cleaning products.

This category represented the second-highest share of March spending at 12 percent, having grown by 28 percent to reach SR7.06 billion. This growth accounted for 36 percent of the overall annual increase in POS spending.

The second-highest contributor to the rise is clothing and footwear, with an increase that contributed 26 percent to the overall growth, reaching SR5.8 billion in March. This was followed by food and beverages, contributing 13 percent, with spending reaching around SR10 billion, marking a 6 percent increase from the same month last year.

Research from Redseer indicated a strong inclination among Saudi respondents towards purchasing groceries, fashion, and beauty or personal care products during the month of Ramadan.

According to the survey, 93 percent of respondents were open to buying groceries, 84 percent to buying fashion, and 72 percent to buying beauty and personal care products.

This period is often associated with heightened social engagements, hospitality, and generosity, leading to increased consumer spending on food, gifts, and charitable donations. Additionally, businesses often offer special promotions and discounts during Ramadan, further stimulating consumer spending.

In Saudi Arabia, there has been a notable shift towards online payments and digitalization, driven by the country’s commitment to providing cutting-edge technologies for its tech-savvy population.

With the rise of e-commerce accessibility and the increasing convenience of online shopping platforms, consumers are opting for digital transactions more than ever before. This trend is not only reshaping the retail landscape but also significantly impacting consumer behavior.

The ease of comparing prices and product options online has empowered consumers, fostering increased competition among retailers and ultimately driving down expenses.

As a result, the adoption of digital payment methods continues to grow rapidly, reflecting a fundamental shift in how transactions are conducted in Saudi Arabia’s dynamic and rapidly evolving marketplace.

One challenge that arises with this growth is the proliferation of fraudulent sites and platforms attempting to deceive interested users. During Ramadan and Eid Fitr, the increase in retail and online transactions provides more opportunities for cybercriminals.

These fraudulent entities have targeted major Saudi platforms by creating fake websites designed to intercept two-factor authentication or one-time passcode codes.

According to Cyber Security News, this sophisticated phishing tactic aims to bypass security measures and gain unauthorized access to victims’ accounts.

Consumers are therefore strongly advised to avoid sharing personal and payment information on questionable sites or with individuals posing as bank or government employees.

Reporting suspicious resources to local law enforcement and designated contacts within these organizations is crucial in helping to mitigate potential fraud risks.


Nearly all Gazans in poverty, Palestinian Authority facing ‘imminent fiscal collapse’ - World Bank

Updated 24 May 2024
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Nearly all Gazans in poverty, Palestinian Authority facing ‘imminent fiscal collapse’ - World Bank

RIYADH: Nearly every Gazan is living in poverty as the Israel-Hamas war continues to have a “devastating impact” on the Palestinian economy, according to the World Bank.

An analysis by the organization sets out how the economic consequences of the conflict have spread beyond Gaza and into the West Bank, with widespread unemployment and underemployment combined with inflation causing a rapid decline in purchasing power for households in both areas.

Nearly half a million jobs across the territories have been lost since October 2023, and per capita gross domestic product declined by 12 percent in 2023.

Israel has bombarded the densely populated Gaza Strip following the Oct. 7 Hamas attack on Israeli communities. Israel says Hamas killed some 1,400 people including children, and took more than 200 hostages, some of them infants and older adults.

The fiscal situation of the Palestinian Authority has dramatically worsened, according to the World Bank, with a financing gap expected to reach $1.2 billion heightening the risk of disorderly adjustments and a potential imminent fiscal collapse.

In May 2023, the World Bank forecast the Palestinian economy to grow about 3 percent by the end of the year, after a 4 percent post-COVID-19 boost in 2022.

That analysis has been completely reversed by the conflict, with the organization now forecasting the Palestinian economy will contract anywhere between 6.5 percent and 9.4 percent during 2024. 

“The northern governorates of Gaza are experiencing a full-blown famine, with food insecurity reaching catastrophic levels, particularly in the northern areas and extending southward,” said the World Bank’s latest report, adding: “At least one in four Gazan is experiencing catastrophic hunger, and 95 percent of the population is suffering from food insecurity.”

Most children in Gaza are at risk of “stunting” because of the famine, the analysis added.

Reflecting on the economic impact of the conflict, the report said the outlook of the Palestinian territories for the full year of 2024 “remains highly uncertain, depending on the severity and duration of the conflict, changes in Israeli policies in the West Bank, including those related to access to the Israeli labor market, and the outcome of the clearance revenue dispute.” 

The Palestinian Authority is facing a significant decrease in clearance revenue transfers and shrinking domestic resource mobilization, coupled with a rigid current expenditure envelope, the World Bank said.

“The PA’s financing gap after aid for 2023 reached $682 million or 3.9 percent of GDP, and the situation is expected to worsen further in 2024, with a potential financing gap of up to $1.2 billion. A focus on fiscal policies, especially those improving spending efficiency, particularly regarding the unsustainable wage bill and enhancing tax mobilization, must remain a top priority in the reform agenda,” said the report.

The World Bank argued that the banking sector across the territories is “well regulated” by the Palestine Monetary Authority, which has “steadily been building the capabilities and resilience of local banks.”

The report added: “Presently, the banking system is well capitalized, liquid, and compliant with the Capital Adequacy Requirements set by the PMA. At the same time, institutional and economic difficulties are tilting the risks upward for the financial sector. Actively avoiding further instability is crucial to allow the financial sector to maintain its established function as a stable pillar during periods of economic challenges.”


Startup Wrap – regional startup activity flourishes  

Updated 24 May 2024
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Startup Wrap – regional startup activity flourishes  

CAIRO: The startup ecosystem in the Middle East and North Africa region saw a flurry of activity as venture investments and acquisitions bloom. 

Saudi Arabia-based Software-as-a-Service provider Merit has raised $12 million in its pre-series B funding round, led by Alistithmar Capital i-Cap and followed by existing series A investors Tech Invest Com and Hambro Perks Oryx Fund. 

Founded in 2016 by Julie Barbier-Leblan and Thrishan Padayachi, Merit assists businesses in increasing customer and employee engagement via a suite of cloud-based SaaS platforms, enterprise solutions, applications, and software.  

This new round will help Merit develop its technology to enhance customer engagement. In 2021, Merit raised $5 million in a series A round led by Saudi Arabia’s Impact46, along with Tech Invest Com, Arzan VC, Hambro Perks Oryx, and several regional angel investors. 

Riyad Capital launches 1957 Ventures to support digital transformation 

Riyad Capital, backed by Riyad Bank, has launched the 1957 Ventures investment fund to drive transformative growth in Saudi Arabia’s fintech sector. 

The fund aims to accelerate the Kingdom’s digital transformation by creating opportunities for innovative fintech business models. 

Abdullah Alshwer, CEO of Riyad Capital, stated, “The 1957 Ventures Fund embodies a forward-thinking financial vision aligned with the Kingdom’s ambitious digital transformation goals; this fund signifies a strategic investment in the future of Saudi fintech.”  

“Our institutional approach will unlock new levels of innovation, driving both sector growth and sustainable economic impact,” he added. 

Saudi logistics startup MDD closes $1.3m series A round 

Saudi Arabia-based logistics startup MDD has closed its series A round with $1.3 million in funding for a 5 percent stake with a valuation of $26 million. 

Founded in 2019, MDD provides supply chain solutions for businesses. 

Saudi startup Sorbet’s raises funding round from web3 VC Adverse 

Saudi web3 startup Sorbet raised an investment round from the Kingdom’s recently announced venture capital firm Adverse. 

Founded by Rami Djebari and Maher Ayari, Sorbet aims to simplify business processes for freelancers by cutting fees and intermediaries. 

“Receiving support from an experienced partner like Adverse will accelerate our development and enhance our market strategy. This collaboration is a milestone in breaking down financial barriers and enabling limitless growth opportunities for professionals in the region,” Djebari said. 

Egyptian fintech e-Finance acquires stakes in Al Ahly Momken and EasyCash 

Egypt-based fintech e-Finance for Digital and Financial Investments has acquired a 25 percent stake in Al Ahly Momken and a 13 percent stake in EasyCash for Digital Payments for an undisclosed deal value. 

Founded in 2005, e-Finance is involved in the development of digital payment infrastructure and digital space to help achieve social development goals.  

Al Ahly Momken, based in Egypt, is a digital payment provider, serving over 90,000 merchants and more than 5 million customers.  

Meanwhile, EasyCash, also based in the north African country, provides payment services for individuals, merchants, and businesses. 

These acquisitions align with e-finance’s strategy to expand its footprint in the digital payments market and support Egypt’s Vision 2030 for digital transformation. 

Egypt’s OneOrder closes $16m series A round 

Egypt-based logistics startup OneOrder has raised $16 million in a series A round in a mix of equity and debt, led by Delivery Hero Ventures, with participation from Norrsken22 and existing investors, Nclude and A15. 

Founded in 2022 by Tamer Amer and Karim Maurice, OneOrder is a tech-enabled supplier and wholesale distributor that offers the food and beverages industry a supply of quality goods with embedded financing.  

The company plans to expand into the Gulf Cooperation Council region by the fourth quarter of 2024. In December 2022, OneOrder closed a seed round at $3 million. 

Jordan’s fintech liwwa takes $5m loan 

Jordan-based fintech liwwa has secured a $5 million loan from the US International Development Finance Corp.. 

Founded in 2013 by Ahmed Moor and Samer Atiani, liwwa is a peer-to-peer lending network that connects investors and small businesses through smart business loans.  

The latest cash influx will enable liwwa to finance further small and medium sized enterprises across various sectors. Liwwa’s last funding round was in 2022, when it raised $18.5 million in a pre-series B round of equity and debt. 

Egyptian investment bank EFG Hermes acquires stake in Danish wealth management firm 

Egypt’s investment bank, EFG Hermes, a subsidiary of EFG Holding, has acquired a minority stake in the Danish digital wealth manager Kenzi Wealth for an unknown value. 

The new partnership will enhance EFG Hermes’ digitalization vision. By combining EFG Hermes’ client network and Kenzi Wealth’s AI tools, EFG Hermes will be able to offer its clients a more efficient and personalized investment experience.  

Founded in 2021 by Mohamed El-Masri, Kenzi Wealth specializes in tailoring investment features to meet the needs of investors. 

Mohamed El-Masri, founder of Kenzi Wealth. Supplied

UAE’s Plain Tiger raises funding round 

UAE-based business-to-business marketplace Plain Tiger has raised an investment from UAE’s venture capital firm AngelSpark for an undisclosed amount. 

Founded in 2021 by Alexandra Polson and Oliver Baillie, Plain Tiger connects hotels with eco-friendly suppliers, saving them time, money, and reducing their environmental impact.  

The investment is part of Plain Tiger’s $1.5 million seed round, which will be used to expand into Saudi Arabia and accelerate more hotels’ pathway to net zero procurement. 

UAE’s Revent closes $900k in pre-seed round 

UAE-based electronics marketplace Revent has raised $900,000 in a pre-seed round, provided by Techstars and a group of angel investors. 

Founded in 2022 by Baldeep Singh and Dhananjay Choubey, Revent offers SMEs pre-owned devices on monthly subscriptions across the UAE and Saudi Arabia.  

The funds will be used to build a self-service platform for businesses, along with growing Revent’s client base in Saudi Arabia. 

UAE’s proptech Keyper closes $4m equity round 

UAE-based proptech Keyper has raised $4 million in equity in a pre-series A round, led by BECO Capital and Middle East Venture Partners, with participation from existing investors Vivium Holding, Jabbar Group, Signature Developers, and new investors Annex Investments, Pin Investment, and Al Qahtani Investment, among other angels. 

The company has also received an additional $30 million in Shariah-compliant sukuk financing from global asset manager Franklin Templeton Investments Ltd., bringing its cumulative capital raised to-date to over $40 million.  

Founded by Omar Abu Innab and Walid Shihabi in 2022, Keyper offers a property management platform where tenants can track their expenses and charge online, and investors get real estate portfolios and access to data-driven insights.  

Keyper will invest the fresh funds into digitizing the rental experience in the UAE and scaling its innovative rent now, pay later solution. Last October, Keyper raised a $6.5 million seed round. 

UAE’s proptech Huspy raises investment round 

The app of proptech firm Huspy. Supplied

UAE-based property technology firm Huspy has raised a fresh investment round led by Balderton Capital, with further participation from existing investor Fifth Wall, amongst other investors. 

Founded in 2020 by Jad Antoun and Khalid Ashmawy, Huspy facilitates the home buying and financing process through its online marketplace.  

The company claims that this round of funding is at a higher valuation than the $37 million series A raised in 2022. The newly acquired capital will be deployed to build a super app for real estate. 

Egypt’s proptech Birdnest raises pre-series A round 

Egypt-based proptech Birdnest has closed an undisclosed pre-series A funding round for a 20 percent stake in the company, led by Beltone Venture Capital and CI Venture Capital. 

Founded in 2020 by Mostafa El-Nahawy and Ahmed Fadda, Birdnest offers furnishing services and rental management solutions to ensure maximum returns for real estate investors and value for tenants.  

The funds are earmarked for the expansion of the regional quality team, the enhancement of proprietary technologies, and marketing initiatives to reinforce Birdnest’s market position.


Oil Updates – crude steady as investors weigh US rate fears, firmer seasonal demand

Updated 24 May 2024
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Oil Updates – crude steady as investors weigh US rate fears, firmer seasonal demand

SINGAPORE: Oil prices were stable on Friday as investors considered the latest comments from the US Federal Reserve on interest rates amid sticky inflation, while signs of firming seasonal US fuel demand lent support, according to Reuters.

Brent crude futures rose 2 cents at $81.38 a barrel at 6:15 a.m. Saudi time, while US West Texas Intermediate crude futures were down 1 cent at $76.86.

Both benchmarks settled at multi-month lows on Thursday, with Brent crude futures closing at their weakest point since January and US crude futures hitting a three-month low.

Brent futures were headed for weekly declines of more than 3 percent, while WTI futures were poised for a slide of nearly 4 percent from last week as ongoing macroeconomic constraints in the US held prices in the balance.

“The sore demand sentiment owing to the hawkish Fed outlook at rates and the backdrop of ‘possibly higher-for-longer rates’ weighed significantly on oil prices this week,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova.

Minutes released on Wednesday from the Fed’s latest policy meeting showed policymakers questioning whether current interest rates are high enough to tame stubborn inflation.

Some officials said they would be willing to hike borrowing costs again if inflation surged. However, Fed Chair Jerome Powell and other policymakers have since said they feel further rate hikes are unlikely.

Higher rates could slow economic growth and crimp fuel demand.

Meanwhile, strengthening US gasoline demand was helping to stabilize prices ahead of the Memorial Day holiday weekend, which is considered the start of the US summer driving season.

Gasoline demand in the US reached its highest level since November, the Energy Information Administration said on Wednesday. That helped support the market as US drivers account for around a tenth of global oil demand, “making the upcoming driving season a pillar of the recovery in global demand growth,” ANZ analysts said in a note.

All eyes are now on the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, set to meet on June 1, where they are expected to discuss whether to extend voluntary oil output cuts of 2.2 million barrels per day.

“The market is also tentative about taking an aggressive positioning ahead of next week’s OPEC meeting, where supply policy will be discussed,” ANZ analysts added. 


Oil creeps back up after three days of losses

Updated 23 May 2024
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Oil creeps back up after three days of losses

Oil prices crept up on Thursday, clawing back some of the previous three days’ losses.

The gains were made despite the US Federal Reserve entertaining a further tightening of interest rates if inflation remains sticky, a move that could hurt oil demand.
Brent crude futures were up 92 cents, or 1.1 percent, at $82.82 a barrel by 1317 GMT. US West Texas Intermediate crude futures were 97 cents, or 1.3 percent, higher at $78.54. Both benchmarks fell more than 1 percent on Wednesday for their third straight day of losses.

Saudi crude exports
Saudi Arabia’s crude exports reached 6.41 million barrels per day in March, according to an analysis from the Joint Organizations Data Initiative.
This figure increased by 96,000 bpd, or 1.52 percent, compared to the previous month, marking a nine-month high. Furthermore, the data indicated that the Kingdom’s crude production fell to 8.97 million bpd, reflecting a monthly decrease of 0.42 percent.
This can be linked to the voluntary oil production cuts adopted by members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+. Saudi Arabia announced in March the extension of its 1 million bpd cut, initially implemented in July 2023, until the end of the second quarter of 2024.
The Ministry of Energy said that the Kingdom’s production will be approximately 9 million bpd until the end of June.
Meanwhile, refinery crude output, representing the processed volume of crude oil yielding gasoline, diesel, jet fuel, and heating oil, fell by 4 percent compared to the previous month, reaching 2.56 million bpd, according to JODI data.