Oil rises on million barrels OPEC pledge

UAE’s Oil Minister OPEC President Suhail Mohamed Al Mazrouei and OPEC Secretary General Mohammad Barkindo address a news conference after an OPEC meeting in Vienna, Austria, June 22, 2018. (Reuters)
Updated 22 June 2018
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Oil rises on million barrels OPEC pledge

  • Oil prices rose almost 3 percent on Friday as OPEC agreed a modest increase in output to compensate for losses in production at a time of rising global demand.
  • The Organization of the Petroleum Exporting Countries agreed on Friday to boost output from July.

LONDON: Oil prices jumped yesterday afternoon as OPEC announced a more modest production increase than forecast.

The group said yesterday that it and its allies would from next month bring production back in line with levels originally agreed in late 2016, equivalent to an increase of around 1 million barrels.

But analysts have warned that the reaffirmed commitment — an effective production increase given that a number of producers have cut output more than agreed— would not be enough to lower prices, given further supply disruptions on the horizon.

OPEC Conference President and UAE Energy Minister Suhail Al-Mazrouei told reporters in Vienna that the target was a group-level commitment, and that individual production quotas for member states had not been set.

Adherence to the decision would be “challenging for those countries that are struggling with keeping their level of production,” he said, but he noted that other countries could pick up any shortfall.

“We will deal with it collectively,” he said, insisting that the group would not not exceed production agreements.

“It is difficult already to achieve that 100 percent,” he added. “No one intends to do anything beyond that.”

But Thomas Pugh, a commodities analyst with Capital Economics, said while OPEC currently had little spare capacity, production rebounds by key states might tempt members to over-produce.

“OPEC has found it difficult to police group quotas in the past so today’s decision runs the risk of production rising above its target,” he said.

“If production starts to rebound in Venezuela or Angola then the group may quickly exceed its quota.”

The lack of detail over individual commitments followed disagreements between Iran and Saudi Arabia about the level of increases ahead of the meeting, according to energy expert Cornelia Meyer.

“The ‘collective agreement’ to return to 100 percent compliance was in the end sufficiently fuzzy for them to get an agreement,” she told Arab News.

“But going forward the market is going to want to see more detail as to how it will be implemented — and by whom — before it impacts prices.”

Brent crude futures rose around 3 percent on the news, briefly exceeding $75 per barrel in early afternoon trading, with prices forecast to rise further in the short-term.

“The effective increase in output can easily be absorbed by the market and is not going to tip the oil balance into negative territory,” Harry Tchilinguirian, head of commodities strategy at BNP Paribas, told Reuters.

“I suspect the market will continue to grind higher, notably in view of oil inventories in the OECD being below the famous five-year average target and the ever present risk of supply outages in Venezuela and Libya.

The agreement is likely to do little to mollify those looking for higher output increases to ease pressure on prices, not least US President Donald Trump.

“Hope OPEC will increase output substantially. Need to keep prices down!” Trump tweeted yesterday, following the announcement of the agreement.

But Meyer noted that shifting macroeconomic trends — notably the prospect of growing trade wars between the US and trading partners like China and the EU — may see rising demand for oil slow or go into reverse.

“We’re out of the goldilocks scenario now,” she said.

“Both Saudi Arabia and Russia have talked up how much the market is short. From now on they may well have to talk it down in terms of that gap between supply and demand.”


Saudi-Finland ties hold ‘almost unlimited potential,’ says Finnish minister

Updated 10 sec ago
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Saudi-Finland ties hold ‘almost unlimited potential,’ says Finnish minister

RIYADH: Mining presents significant opportunities for collaboration between Saudi Arabia and Finland, a senior Finnish minister stated, emphasizing the “almost unlimited potential” of their bilateral relationship.

In an interview with Arab News on the sidelines of the Future Minerals Forum in Riyadh on Jan.14, Wille Rydman, Finland’s minister for economic affairs, highlighted that Saudi Arabia’s partnership with Finnish companies could play a key role in achieving sustainability within the Kingdom's mineral sector.

Saudi Arabia already enjoys a robust relationship with Finland in the energy sector. In October, the two countries signed a memorandum of understanding to accelerate collaboration in areas such as clean power technologies, stable electricity systems, and climate change mitigation solutions.

“I think that there is almost unlimited potential in our bilateral trade relations. As we are now meeting here in the Future Minerals Forum, the focus is heavily on the mining industry. And I think that’s one of the arenas where our countries can cooperate even deeper in the future,” Rydman said.

He added: “Finnish companies are very known for their sustainability, their ability for doing (a) sustainable mining industry. I’m very confident that they can also give a lot of know-how and business potential for Saudi Arabia’s mineral sector.”

Rydman further emphasized that Finnish collaboration in the mining sector would assist Saudi Arabia in meeting its energy transition targets. Strengthening the industry, he noted, is essential for achieving these goals, as minerals are crucial for the electrification of societies.

“It’s been globally very well recognized how important a role critical raw materials are playing in the future energy transition, and how important it is to maintain those critical supply and value chains when it comes to minerals and mining industry,” the minister explained.

He also pointed out that Saudi Arabia’s Vision 2030, which includes objectives like responsible mining and the use of green energy, presents valuable opportunities for Finnish companies to operate within the Kingdom.

“The aims and targets that Saudi Arabia has put for itself are actually kind of targets and aims where Finnish companies have been succeeding very well, especially when it comes to the mining industry, responsible mining, green energy, green and clean transition. And that’s why I think that Finnish companies entering Saudi Arabian markets can help Saudi Arabia to reach those targets,” Rydman said.

The minister also extended an invitation to Saudi investors to explore opportunities in Finland.


ACWA Power expands in China with $312m in renewable energy deals

Updated 14 January 2025
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ACWA Power expands in China with $312m in renewable energy deals

RIYADH: Saudi Arabia’s ACWA Power has solidified its position in China’s renewable energy sector with two major agreements valued at $312 million.

These agreements mark a significant step in the company’s global expansion strategy and underscore its commitment to driving the country’s clean energy transition.

The deals include a 132-megawatt solar photovoltaic portfolio in Guangdong province and a 200-megawatt wind energy project, according to a company statement. Both projects are central to ACWA Power's broader strategy in China, which was launched in 2023 to support the nation’s renewable energy goals.

Marco Arcelli, CEO of ACWA Power, expressed enthusiasm about the developments: “This is a significant milestone for ACWA Power in China, establishing our operational presence in renewable energy and water desalination. We are committed to working alongside our Chinese partners to contribute to the country's clean energy and water transition.”

Arcelli further emphasized the company’s long-term vision: “We are not only investing in renewable energy projects but also in Chinese expertise and building enduring relationships within the country.”

The solar project, ACWA Power’s first collaboration at the asset level with its long-term supply chain partner Sungrow Renewables, will span three separate sites in Guangdong. Additionally, the wind energy agreement, which was signed with Mingyang Smart Energy Group — a leading wind turbine manufacturer — opens the door for joint investments in China’s rapidly expanding wind sector.

ACWA Power’s formal entry into China’s renewable energy market was announced in December 2024, with the company planning to develop projects exceeding 1 gigawatt across multiple provinces.

Mohammad Abunayyan, founder and chairman of ACWA Power’s board of directors, commented: “Our entry into China’s renewable energy market represents a key milestone in our global strategy for a sustainable future. Our growth is not just about adding megawatts; it’s about forging lasting partnerships that accelerate the energy transition and create a cleaner, more prosperous world for future generations.”

These projects are part of an initial phase that will see ACWA Power expand its portfolio to more than 1 gigawatt of capacity in China. This move aligns with the company’s long-term ambition to triple its assets under management to approximately $250 billion globally by 2030.


Closing Bell: Saudi main index gains 0.52% to close at 12,173

Updated 14 January 2025
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Closing Bell: Saudi main index gains 0.52% to close at 12,173

RIYADH: Saudi Arabia’s benchmark Tadawul All Share Index rebounded on Tuesday, rising by 62.81 points, or 0.52 percent, to close at 12,172.75.

The index saw a total trading turnover of SR6.10 billion ($1.63 billion), with 150 stocks advancing and 87 declining.

The Kingdom’s parallel market also posted gains, rising by 82.65 points to finish at 31,317.09. The MSCI Tadawul Index increased by 0.50 percent, closing at 1,517.21.

The day’s biggest gainer was Nice One Beauty Digital Marketing Co., with its share price surging 9.81 percent to SR54.30.

Other notable performers included Americana Restaurants International PLC – Foreign Co., which rose 9.01 percent to SR2.42, and Fawaz Abdulaziz Alhokair Co., which gained 8.08 percent to SR15.78.

On the downside, Savola Group saw its share price drop by 2.23 percent, closing at SR37.35.

On the announcements front, Al Jouf Cement Co. announced that recent adjustments to fuel prices in Saudi Arabia would lead to a 10.1 percent increase in production costs.

The company said the impact would be reflected in its financial performance for the first quarter of 2025. As a result, Al Jouf Cement’s share price declined by 0.92 percent, closing at SR10.74. KnowledgeNet Co. revealed that it had signed a SR3.12 million contract with Beltone Securities Brokerage, Beltone Securities Holding, and Beltone Fixed Income to provide financial brokerage and custody services.

The deal will see KnowledgeNet replace its existing systems with the TradeNet Back Office System and TradeNet Custody System, which the company believes will improve the efficiency of its operations. KnowledgeNet’s share price rose by 1.60 percent, closing at SR35.

Ataa Educational Co. also announced that its shareholders had approved a 12.5 percent cash dividend, totaling SR1.25 per share, for the financial year ending July 31, 2024. Despite the dividend approval, the company’s share price fell by 0.27 percent, closing at SR74.50.


Lebanon’s economy recovery dependent on global support, stable ceasefire: Moody’s 

Updated 14 January 2025
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Lebanon’s economy recovery dependent on global support, stable ceasefire: Moody’s 

RIYADH: Lebanon’s economy is expected to start recovering this year following a 10 percent contraction in 2024, as the country returns to fully functioning institutions, according to Moody’s. 

On Jan. 9, the country elected former army commander Joseph Aoun as president, and followed that by appointing Nawaf Salam, chief of the International Court of Justice, as prime minister on Jan. 13. 

Aoun’s election ended a leadership void that had persisted since the previous president’s term expired in October 2022. 

“We estimate an economic contraction of 10 percent in 2024 because of the conflict but expect economic activity to start recovering later this year – assuming a permanent cessation of hostilities,” Moody’s said in a commentary. 

The Middle Eastern country’s return to fully functioning institutions will boost the continued enforcement of the ceasefire with Israel, supported by the monitoring role of the US, France and the UNIFIL, the agency added. 

Lebanon’s recovery requires substantial international support, a fact underscored by an international donor conference held in Paris in October. The conference raised $1 billion in pledges, with $800 million allocated for humanitarian assistance and $200 million earmarked for military support. 

These funds are expected to address the immediate needs of over 1.3 million people displaced during the September-November conflict, as well as the $8.5 billion in economic losses incurred, including $3.4 billion in physical damage to infrastructure, as reported by the World Bank. 

While these pledges offer a lifeline, the disbursement of funds will likely be contingent on the government’s adherence to reform commitments under a forthcoming International Monetary Fund program, Moody’s noted. 

These reforms include comprehensive debt restructuring for the government, the central bank, and commercial banks, aimed at ensuring long-term economic recovery and sustainability. 

“Lebanon’s current C rating reflects our expectation that holders of Lebanese eurobonds will recover less than 35 percent of par following the eventual eurobond restructuring,” the agency added. 
 
According to Moody’s, fiscal and investment activity has been sharply curtailed, undermining long-term growth prospects and the provision of public services. 

Tourism and remittances from Lebanon’s diaspora continue to serve as vital sources of foreign exchange, but they are insufficient to address the structural imbalances in the economy. 

Public debt, estimated at 150 percent of the gross domestic product by the end of 2024, remains one of the highest globally, presenting a formidable challenge to fiscal sustainability, noted Moody’s. 

Aoun’s election has been welcomed by international observers as a turning point for Lebanon, which has been mired in political paralysis, economic collapse, and the aftermath of recent conflicts. 

The new president will lead efforts to form a fully empowered government, replacing the current caretaker administration led by former Prime Minister Najib Mikati “that has been operating with limited powers.” 

Aoun’s leadership of the Lebanese Armed Forces was instrumental in enforcing the November ceasefire between Hezbollah and Israel, according to Moody’s. 

The ceasefire has been critical in creating a stable environment for Lebanon’s recovery. Observers note that the role of the armed forces in securing the truce reflects Aoun’s ability to command respect and cooperation from various stakeholders, a quality deemed vital for navigating Lebanon’s complex political landscape. 


NMDC Energy opens advanced fabrication yard in Ras Al-Khair

Updated 14 January 2025
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NMDC Energy opens advanced fabrication yard in Ras Al-Khair

JEDDAH: A new fabrication yard with an annual capacity of 40,000 tonnes has opened in Saudi Arabia’s Ras Al-Khair Special Economic Zone, marking a significant development for the Kingdom’s energy sector. 

The facility, built by NMDC Energy — a UAE-based provider of engineering, procurement, and construction services — is equipped with advanced automation and digital technologies, according to a press release. 

Valued at 200 million dirhams ($54.4 million), the new yard marks an important step in strengthening NMDC Energy’s regional presence and supporting Saudi Arabia’s energy infrastructure, it added. 

The project aligns with the country’s Vision 2030 goals, enhancing its capacity to produce energy solutions while driving industrial growth. 

“The inauguration of the Ras Al-Khair yard represents a bold and exciting new chapter for energy cooperation for both the UAE and Saudi Arabia, which will bring vast tangible benefits to both nations,” said Mohamed Hamad Al-Mehairi, chairman of NMDC Energy. 

He added: “We foresee vast opportunities to collaborate and to pursue projects in areas that will maximize the value of the resources in both our nations as well as ensure that the UAE and KSA remain leaders in the regional energy transition.” 

Ras Al-Khair, located in Eastern Province, is a key industrial region that contributes 60 percent of Saudi Arabia’s gross domestic product. The new yard is expected to further drive growth in the region, fostering investment, trade, and job creation in the energy sector. 

The facility was officially inaugurated at the iktva Forum and Exhibition 2025, with Prince Saud bin Nayef bin Abdulaziz, governor of Eastern Province, in attendance. 

Spanning 400,000 sq. meters, the new yard will focus on offshore facilities fabrication and onshore modularization, playing a key role in Saudi Arabia’s growing maritime and offshore cluster. 

The company has reinvested SR5 billion ($1.33 billion) in the Saudi economy over the past five years, supporting the Kingdom’s economic priorities and diversifying its industrial base. 

“At NMDC Energy, we understand that the essence of Saudi Vision 2030 is that it seeks a strong, thriving and stable Saudi Arabia. That’s why we’re looking forward to bringing 51 years of experience to create new opportunities for prosperity for both KSA and the UAE, as well as supporting new and existing clients across the wider region,” said Ahmed Al-Dhaheri, CEO of NMDC Energy. 

He added: “Through our projects and collaborations in Ras Al Khair, we can build upon Saudi’s national priorities by helping to diversify the national economy, creating skilled jobs and harnessing the full potential of the skilled labor force.”