LONDON: Even if oil consumption reaches a peak and then starts to fall, the world will still need large quantities of oil for many decades to come.
The prediction is contained in a thoughtful paper co-authored by Spencer Dale, chief economist of BP, and Bassam Fattouh, director of the Oxford Institute for Energy Studies.
“Global oil demand is likely to continue growing for a period, driven by rising prosperity in fast-growing developing economies,” they wrote in a paper published on Monday.
“But that pace of growth is likely to slow over time and eventually plateau, as efficiency improvements accelerate.”
The implication is that consumption is likely to reach a maximum at some point and then start to fall, though the timing and magnitude of the peak are highly uncertain and very sensitive to assumptions.
And even once demand has peaked, consumption is unlikely to drop sharply, the authors argue, given the inherent advantages of oil as an energy source, particularly its energy density.
“Peaking oil demand is not expected to trigger a significant discontinuity or sharp fall in demand,” they wrote.
Under most scenarios, the world will still be consuming tens of millions of barrels of oil per day through the middle of the century.
There are sufficient known oil resources to meet all the world’s oil demand through 2050 twice over, according to BP estimates.
But given the natural decline in output from existing fields, substantial investment will be needed to turn those resources into reserves and produce them.
The predicted peaking of consumption, coupled with vast resources, and new production made possible by hydraulic fracturing and horizontal drilling have transformed the long-term outlook for the oil industry.
The dominant narrative, which before 2008 was characterised by fears about future scarcity and oil supplies running out, has been transformed into one about future abundance.
Some now worry that many of those resources will never be needed and may become stranded assets — a welcome development for climate campaigners but a potential problem for oil producers.
Peak oil demand signals “a shift in paradigm: From an age of scarcity to an age of abundance, with potentially profound implications for oil markets,” according to Dale and Fattouh.
In an era of abundance, oil markets are likely to become increasingly competitive, as resource owners compete to secure market share and produce their reserves rather than risk them being left in the ground.
“Faced with the possibility that significant amounts of recoverable oil may never be extracted, low-cost producers have a strong incentive to use their comparative advantage to squeeze out high-cost producers and gain market share.”
Better to have money in the bank than leave oil in the ground.
As the oil market becomes more competitive, low-cost producers will find it more profitable to switch to a high-volume, lower price strategy — in contrast to the old strategy of restricting volumes and raising prices.
The argument applies especially to Saudi Arabia, Kuwait and Abu Dhabi.
The implication is that many producing countries will see revenues and formerly high resource rents decline, to the benefit of consumers.
In theory, competition for market share should drive oil prices down to the marginal cost of extraction, which the authors suggest could be lower than $10 per barrel for the major Middle East producers.
But these countries rely heavily on oil revenues to fund government operations, defense, healthcare, education and social safety nets. They need prices well above the marginal cost of extraction.
To be sustainable, oil prices must be high enough to cover these “social costs” as well as the much lower costs of physical extraction.
The authors cite fiscal breakeven prices as a proxy for social costs and say breakevens for five major Middle Eastern producers averaged $60 per barrel in 2016 compared with a physical cost of production of just $10.
Many low-cost producers recognize the need to diversify their economies away from dependence on oil but experience suggests such transitions take decades to complete.
In the meantime, the authors argue, many low-cost producers will try to resist the shift to a higher-volume, lower-price strategy while they try to make progress with the transition.
The problem with this argument is that it makes oil prices a function of social costs. In reality, it is the other way around — price drives social spending.
Dale and Fattouh argue that “it is likely that many low-cost producers will delay adopting a more competitive strategy until they have made significant progress in reforming their economies. This is likely to slow the speed at which the new competitive oil market emerges.”
“The shift to a more competitive oil market environment won’t just happen on its own accord, it requires a critical mass of low-cost producers both to recognize the need to adopt a more competitive strategy and, more importantly, to have reformed their economies sufficiently for them to be able to adopt such a strategy sustainably.”
If social costs in many low-cost producing countries remain high, according to Dale and Fattouh, that is likely to slow the pace at which a more competitive market takes hold, until they can reduce them.
Fattouh and Dale assume that Saudi Arabia and the other low-cost Middle East oil producers can successfully exercise market power, restricting production to keep prices high.
But they are probably overstating OPEC’s market power.
In the 1980s, OPEC’s market power was broken by the emergence of rival oil supplies from the North Sea as well as Russia, Alaska and China. In the 2010s, its market power was hit by the emergence of US shale, Canadian heavy oil and deepwater projects.
In practice, prices have been driven by the cost of developing and producing alternative supplies outside the major producing economies of the Middle East.
The cost of these alternative supplies is well above the $10 physical extraction cost of the major Middle East fields — but it may or may not be high enough to cover their social costs.
In future, the major oil producers will also have to reckon with increasing competition from other forms of energy.
Dale and Fattouh conclude that social costs and the pace of economic reform in the major oil-producing countries will have a decisive impact on oil prices over the next few decades.
In practice, the opposite is probably true. Oil prices and the degree of competition from other sources of supply, as well as electric vehicles, will have a decisive impact on the producers’ social spending and the rate of diversification.
• John Kemp is a Reuters market analyst. The views expressed are his own.
Peak oil demand and its implications for Gulf producers
Peak oil demand and its implications for Gulf producers
Trump-backed financial firm partners with Pakistan Crypto Council to boost blockchain adoption
- Pakistan has signaled plans to announce comprehensive cryptocurrency legalization policies soon
- Country’s finance chief says such partnerships will open new doors for investment and innovation
KARACHI: World Liberty Financial (WLF), a decentralized finance platform backed by US President Donald Trump, signed a letter of intent with Pakistan’s Crypto Council on Saturday to advance blockchain innovation, stablecoin adoption and decentralized finance (DeFi) integration across the South Asian country.
The agreement, signed in Islamabad, comes as Pakistan looks to formalize its crypto economy amid rising interest in blockchain technologies.
Pakistan is already among the world’s fastest-growing crypto markets, ranking near the top in global adoption rates, with an estimated $300 billion in annual crypto transactions and around 25 million active users.
The government has signaled plans to announce comprehensive cryptocurrency legalization policies soon, building on its wider digital economy ambitions fueled by a largely young population and growing mobile penetration.
“Pakistan’s youth and technology sector are our greatest assets,” Finance Minister Muhammad Aurangzeb, who is currently in Washington and attended the ceremony through video link, said, according to a government statement. “Through partnerships like this, we are opening new doors for investment, innovation and global leadership in the blockchain economy.”
The WLF delegation also met Prime Minister Shehbaz Sharif, Chief of Army Staff General Asim Munir, Deputy Prime Minister Ishaq Dar and several federal ministers during the visit.
The partnership outlines cooperation on areas such as regulatory sandboxes for blockchain product testing, tokenization of real-world assets, expansion of stablecoin applications for remittances and trade and advisory support on blockchain infrastructure and regulatory trends.
Pakistan’s proactive stance follows its broader push to position itself as a hub for digital finance innovation, with 64 percent of its population under the age of 30.
Rising mobile broadband access, a booming freelance economy and increasing government interest in blockchain have accelerated the country’s Web3 adoption.
Bilal Bin Saqib, CEO of the Pakistan Crypto Council, said the collaboration with WLF was aimed at empowering Pakistan’s young population and integrating the country more deeply into the future of global finance.
WLF leadership praised Pakistan’s “energy, vision and talent,” calling it one of the most exciting places in the world to build decentralized finance ecosystems.
Pakistan requests extra 10 billion yuan on China swap line, says finance minister
- Muhammad Aurangzeb says Pakistan aims to diversify its lending base by issuing panda bond
- He expects IMF board to approve first loan review, climate resilience disbursement early next month
WASHINGTON: Pakistan has put in a request to China to augment its existing swap line by 10 billion yuan ($1.4 billion), Finance Minister Muhammad Aurangzeb said, adding he expected the country would launch a Panda bond before year-end.
Pakistan has an existing 30 billion yuan swap line already, Aurangzeb told Reuters in an interview on the sidelines of the International Monetary Fund and World Bank Group spring meetings in Washington.
“From our perspective, getting to 40 billion renminbi would be a good place to move toward ... we just put in that request,” Aurangzeb said.
China’s central bank has been promoting currency swap lines with a raft of emerging economies, including the likes of Argentina and Sri Lanka.
Pakistan has also made progress on issuing its first panda bond — debt issued on China’s domestic bond market, denominated in yuan. Talks with the presidents of the Asian Infrastructure Investment Bank (AIIB) and Asian Development Bank (ADB) — the two lenders who are in line to provide credit enhancements for the issue — had been constructive, he said.
“We want to diversify our lending base and we have made some good progress around that — we are hoping that during this calendar year we can do an initial print,” he said.
Meanwhile, Aurangzeb expected the IMF executive board to sign off in early May on the Staff Level Agreement on its new $1.3 billion arrangement under a climate resilience loan program as well as the first review of the ongoing $7 billion bailout program.
Getting the green light from the IMF board would trigger a $1 billion payout under the program, which the country secured in 2024 and has played a key role in stabilizing Pakistan’s economy.
Asked about the economic fallout from the tensions with India following the killing of 26 men at a tourist site earlier this month, Aurangzeb said it was “not going to be helpful.”
The attack triggered outrage and grief in India, along with calls for action against neighbor Pakistan, whom New Delhi accuses of funding and encouraging terrorism in Kashmir, a region both nations claim and have fought two wars over.
After the attack, India and Pakistan unleashed a raft of measures against each other, with Pakistan closing its airspace to Indian airlines and suspending trade ties, and India suspending the 1960 Indus Waters Treaty that regulates water-sharing from the Indus River and its tributaries.
Trade flows between the two countries had already fallen off sharply following past frictions and totalled just $1.2 billion last year.
Aurangzeb estimated growth around 3% in the current financial year which ends in June 2025, and in the 4-5% range next year, with a view to hitting 6% thereafter.
Saudi PIF assets triple with 390% surge since 2016, 2030 target raised
- Record-breaking growth fuels job creation, sector expansion, and a powerful shift beyond oil
RIYADH: Saudi Arabia’s Public Investment Fund has recorded a 390 percent surge in assets under management since the launch of Vision 2030, according to the initiative’s latest annual report.
PIF’s assets have soared from $160 billion in 2016 to $941.3 billion in 2024, surpassing its annual target of $880 billion and underscoring the fund’s rapid growth trajectory under the Kingdom’s transformative agenda.
Building on this momentum, the wealth fund has revised its 2030 goal, raising its asset management target from $1.87 trillion to $2.67 trillion. The updated ambition reflects the fund’s strengthened position and growing influence in shaping Saudi Arabia’s future economy.
Between 2016 and 2024, PIF posted a compound annual growth rate of 22 percent, highlighting its consistent ability to generate strong returns while advancing national development priorities.
Driving forces behind PIF’s expansion
Following its restructuring under Vision 2030, PIF has transformed from a traditional sovereign wealth fund into a globally recognized driver of economic diversification and innovation.
The fund’s growth has been propelled by a proactive, diversified investment approach, with 40 percent of its portfolio allocated to Saudi companies and giga-projects. Simultaneously, it has made strategic international investments across high-potential sectors.
This balanced strategy has contributed to the expansion of priority industries within the Kingdom, including tourism, mining, culture, logistics, and technology, supporting efforts to build a resilient, diversified economy.
Economic impact and sectoral growth
PIF’s strategic investments have not only boosted economic growth but also stimulated private sector participation, created employment opportunities, and attracted foreign direct investment.
By 2024, the fund’s initiatives had contributed to the creation of 1.1 million jobs, a significant leap from 77,700 direct and indirect jobs recorded in 2021. Over the same period, the number of companies established with PIF’s support more than doubled, rising from 45 to 93 across 13 strategic sectors.
The fund achieved 48 percent local content across its projects by 2024, highlighting its strong commitment to driving domestic economic growth.
Between 2021 and the third quarter of 2024, PIF attracted more than $37.33 billion in private investments across a range of initiatives, according to the report.
Through its Private Sector Hub initiative, it published over 200 opportunities during this period, representing a total investment value of $10.67 billion.
In addition, more than 300 contractors have been pre-qualified, and over 200 small and medium-sized enterprises have been trained to collaborate with companies across PIF’s portfolio.
PIF’s role in strengthening Saudi Arabia’s non-oil economy has been pivotal.
According to the report, non-oil sectors accounted for 51 percent of the Kingdom’s real gross domestic product by 2024, a key milestone in achieving Vision 2030 goals.
The fund’s influence is evident in the launch of several megaprojects aimed at redefining the Kingdom’s economic landscape, ranging from world-class tourism destinations to advanced industrial zones.
PIF also played a crucial role in advancing financial sector reforms. The number of licensed asset managers in Saudi Arabia rose sharply from just five in 2019 to 36 in 2024, reflecting the Kingdom’s growing investment landscape and financial market sophistication.
Strengthening financial resilience
The fund has reinforced its financial base to support its ambitious investment strategy, highlighted by the transfer of 8 percent of Aramco shares. This move reduced the government’s direct ownership in the oil giant to 82.186 percent, enhancing PIF’s asset strength and investment capacity.
In addition, PIF secured $15 billion in syndicated credit facilities from 23 global financial institutions, significantly boosting its liquidity and financial flexibility. These initiatives align with PIF’s strategic objectives of developing new sectors, localizing knowledge and technology, and generating sustainable, high-quality employment opportunities across the Kingdom.
Global recognition
PIF’s transformation has not gone unnoticed on the international stage. The fund was named the world’s No.1 sovereign wealth fund brand by Brand Finance, with its brand value estimated at $1.1 billion.
Adding to its accolades, PIF swept four awards at the 2024 Middle East Bonds, Loans & Sukuk Conference, including Best Sukuk Deal, Best Landmark Deal, Best Semi-Sovereign Treasury and Funding Team, and Best Deal in Islamic Capital Markets.
Capital markets expansion
Saudi Arabia’s capital markets have grown in tandem with PIF’s rise, playing a critical role in broadening the nation’s economic base since the launch of Vision 2030.
Regulatory reforms—such as updates to the Companies Law and Government Tenders and Procurement Law—have enhanced transparency, strengthened investor confidence, and paved the way for a surge in initial public offerings.
The Saudi Exchange has seen remarkable expansion, with the number of listed companies increasing from 205 in 2019 to 353 in 2024. Foreign investor ownership more than doubled, reaching $112.8 billion in 2024 compared to $52.8 billion in 2019, while non-Saudi portfolio ownership grew from $29.3 billion in 2016 to $131.5 billion.
The number of individual portfolios on the Saudi Exchange also rose sharply, climbing from 9.2 million in 2016 to 13 million by 2024.
Meanwhile, Tadawul’s market capitalization (excluding Aramco) grew from 66.5 percent of GDP in 2019 to 86.7 percent in 2024, indicating the increasing maturity and depth of Saudi Arabia’s capital markets. The banking sector mirrored this growth, with total assets rising from $693.3 billion in 2019 to $1.12 trillion by the second quarter of 2024.
These developments have positioned Saudi Arabia’s financial sector as one of the most dynamic and accessible in the region, offering expanded opportunities for both local and global investors.
Reflecting this confidence, international credit rating agencies reaffirmed Saudi Arabia’s strong economic outlook in 2024. Moody’s assigned an AA3 rating, Fitch rated the Kingdom at “A+,” and S&P Global Ratings gave it an “A/A-1” rating, all with stable outlooks.
Beyond Vision 2030
As the Kingdom prepares to enter the final phase of Vision 2030 delivery in 2026, the focus will increasingly shift toward building a sustainable and resilient private sector. Key priorities include reducing reliance on government support while fostering growth through regulatory enhancements, infrastructure development, and targeted investments.
Saudi Arabia envisions the private sector playing a leading role in advancing the economy, particularly in high-impact fields such as advanced manufacturing, artificial intelligence, and the digital economy.
By empowering private enterprises, the Kingdom aims to achieve its target of generating 65 percent of GDP from private sector activities, positioning it as a critical driver of sustainable growth in the decades beyond Vision 2030.
Pakistan’s forex reserves triple since early 2023 as central bank targets $14 billion
- Central bank governor says Pakistan’s reserves have seen both qualitative and quantitative improvement
- Governor Jamil Ahmed was briefing executives of global financial and investment institutions in the US
KARACHI: Pakistan’s foreign exchange reserves have more than tripled since early 2023, driven by a surplus in the external current account rather than fresh borrowing, the top central bank official said, according to a statement on Saturday, as the country targets $14 billion in reserves by June.
Pakistan’s forex reserves had touched critically low levels two years ago, giving it an import cover of less than a month. Faced with the threat of a sovereign debt default, the country secured a $3 billion short-term International Monetary Fund (IMF) bailout, tightened fiscal and monetary policies, restricted imports and allowed greater exchange rate flexibility.
Governor of the State Bank of Pakistan, Jameel Ahmad, told senior executives from global financial and investment institutions on the sidelines of the IMF-World Bank Spring Meetings in Washington the country’s external buffers had seen a “substantial qualitative as well as quantitative improvement” since then, as he briefed them about the current economic situation.
“Unlike previous episodes of reserve build-up, the ongoing rise in external buffers is not due to any further accumulation of external debt,” he said. “In fact, Pakistan’s public sector external debt, both in absolute terms and as a percent of GDP, has declined since June 2022.”
Ahmad added that the central bank had been able to strengthen reserves through foreign exchange purchases in the open market, supported by a current account surplus.
“The SBP is targeting to increase [forex] reserves to $14 billion by June 2025,” he said.
Ahmad said Pakistan had made tangible progress in stabilizing its economy, crediting a prudent monetary policy and sustained fiscal consolidation efforts for the improvement.
He informed that headline inflation had declined sharply over the past two years, reaching a multi-decade low of 0.7 percent in March 2025, while core inflation had also dropped from above 22 percent to a single digit and was expected to moderate further in the coming months.
Pakistan’s IT exports seen reaching $4 billion in FY25 as industry seeks tax relief
- Country’s software association calls IT industry the only sector with 75% trade surplus
- Government has set an ambitious target of reaching $10 billion in IT exports by 2029
KARACHI: Pakistan’s information technology (IT) sector expects exports to reach $4 billion in the current fiscal year and seeks regulatory reforms and a 10-year tax holiday to sustain growth momentum, said the country’s top software association on Saturday.
The IT sector is one of Pakistan’s priority industries as the country looks to boost export revenues and stabilize its external accounts.
Under the government’s “Uraan Pakistan” initiative, launched last year in December, Islamabad aims to raise IT exports to $10 billion by 2029.
Industry leaders say IT remains one of the few sectors capable of exponential growth despite the broader economic challenges.
“Muhammad Umair Nizam, Senior Vice Chairman of Pakistan Software Houses Association (P@SHA), has apprised that information technology has become the fastest growing export industry of Pakistan – and, the country is set to achieve $4 billion in its IT exports for the FY25,” the software association said in a statement, adding that Pakistan’s IT exports stood at $3.2 billion in the last fiscal year with the prospect for a 25% year-on-year growth.
However, P@SHA warned regulatory bottlenecks and inconsistent tax policies were hampering the sector’s expansion at a time when new tech sub-sectors were emerging.
The association said it had also submitted detailed budget proposals to the government, seeking a facilitative framework that includes streamlined foreign exchange regulations, banking sector support, removal of sales tax anomalies and accelerated development of special technology zones and IT parks.
Pakistan’s IT industry is the only sector with a trade surplus of around 75%, the statement said, underlining its potential to create jobs, develop skilled human capital and reduce the trade deficit on a sustainable basis.
The software association also raised concerns over income tax disparities between salaried employees and freelancers, saying the current structure discourages formal employment and needs urgent correction in the upcoming federal budget.
