RIYADH: The efforts of major oil producers within OPEC+ to stabilize prices curbed volatility by more than two thirds a new study has found.
It looked at both the impact of the Organization of the Petroleum Exporting Countries (OPEC) over the last 50 years as well as the group known as OPEC+ which was created in 2017 and includes other major producers such as Russia.
The study was co-authored by the King Abdullah Petroleum Studies and Research Center (KAPSARC) and published by the International Association of Energy Economics.
The research finds that between 2017 and 2019, the actions of OPEC+ reduced monthly oil price volatility by 64 percent.
Between 2001 and 2014 OPEC’s attempts to stabilize the oil market reduced oil price volatility by at least a quarter and by as much as half.
The peer-reviewed research paper, titled “OPEC’s Pursuit of Market Stability” concludes that OPEC’s use of spare capacity has achieved a significant reduction in oil price volatility, especially during the more recent OPEC+ period.
The study highlights the challenges of achieving stability in world oil market, with disruptions to demand and supply being both large and frequent and originating from multiple sources such as war, natural disaster and financial crisis.
The research also outlines how market reaction to each shock can be magnified by the inelastic nature of crude oil demand and supply. This means that in the absence of market intervention, large price movements are required to close relatively small gaps in the market.
For many years, OPEC in general, and Saudi Arabia in particular, has sought to offset market shocks, the most recent example being Saudi Arabia’s attempts to respond to the COVID-19-induced oil market crisis.
According to the paper, OPEC’s spare capacity, the majority of which is held by the Kingdom, has been sufficient to avoid major outages for much of the group’s recent history.
The study found that OPEC’s efforts to stabilize the oil market increase global GDP by an average of $175 billion annually (around 0.2 percent of the world’s GDP) — with the greatest benefits accruing to oil-intensive economies.
The authors’ analysis also addresses the development of shale oil and its impact on the market, finding that it has not significantly reduced the need for OPEC’s spare capacity.
Shale only accounts for a small amount of non-OPEC supply, 11 percent as of 2019, and so its impact on the elasticity of total non-OPEC supply is limited, despite the fact that its short-run price elasticity is much higher than that of conventional oil.
KAPSARC was founded as a non-profit institution for independent research into global energy economics. It brings together an international group of expert researchers of more than 15 nationalities. Located in Riyadh, the center was established by the Saudi Council of Ministers, and its facilities were opened in 2013.
OPEC+ efforts slashed oil market volatility by two-thirds, study finds
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OPEC+ efforts slashed oil market volatility by two-thirds, study finds
- The research finds that between 2017 and 2019, the actions of OPEC+ reduced monthly oil price volatility by 64 percent
- The research also outlines how market reaction to each shock can be magnified by the inelastic nature of crude oil demand and supply
Closing Bell: Saudi stock markets rise, TASI climbs over 1%
RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Sunday, gaining 127.90 points, or 1.09 percent, to close at 11,853.78.
The total trading turnover of the benchmark index was SR4.67 billion ($1.24 billion), as 207 of the stocks advanced and 35 retreated.
Similarly, the Kingdom’s parallel market Nomu gained 139.42 points, or 0.45 percent, to close at 31,275.27. This comes as 50 stocks advanced while 30 retreated.
The MSCI Tadawul Index also gained 15.52 points, or 1.05 percent, to close at 1,494.79.
The best-performing stock of the day was Arriyadh Development Co., whose share price surged 9.91 percent to SR36.05.
Other top performers included Saudi Research and Media Group, whose share price rose 7.97 percent to SR189.60 as well as Banan Real Estate Co., whose share price surged 6.27 percent to SR6.95.
Saudi Paper Manufacturing Co. recorded the most significant drop, falling 3.62 percent to SR58.50.
Al-Baha Investment and Development Co. also saw its stock prices fall 2.56 percent to SR0.38.
Tihama Advertising and Public Relations Co. also saw its stock prices decline 1.84 percent to SR16.00.
On the announcements front, Saudi Reinsurance Co. has announced its annual financial results for the year ended on Dec. 31. According to a Tadawul statement, the firm reported a net profit of the investment results of SR440 million in 2024, reflecting a 628 percent increase compared to 2023. This increase in net profit is primarily attributed the company’s recording capital gains from the sale of its stake in Probitas Holding amounting to SR 365.9 million.
The firm’s Board of Directors also recommended by way of circulation to increase the company’s capital by 46.6 percent according to distributing 51.48 million shares as bonus shares to shareholders by granting 4 shares for each 9 shares, which represents an increase of 44.44 percent of the company’s capital. It also comes according to allocating additional 2.5 million shares for establishing the company’s long-term incentive share employee shares plan, which represents an additional 2.16 percent of its capital. This move comes to support the firm’s growth and further strengthen its financial position.
Saudi Reinsurance Co. ended the session at SR48.10, down 0.53 percent.
Najran Cement Co. has also announced its annual financial results for the year ended on Dec. 31. A bourse filing revealed that the company reported a net profit of SR68.4 million in 2024, reflecting a 24.05 percent surge compared to 2023. This jump is linked to an increase in sales and an improvement in gross margin, despite the rise in the general and administrative expenses and climb in the finance cost.
Najran Cement Co. ended the session at SR8.75, up 3.34 percent.
Saudi Arabia launches $266m program to promote eco-friendly projects
RIYADH: Saudi Arabia has unveiled a new environmental financing initiative worth SR1 billion ($266.6 million), supported by Riyad Bank, to encourage private sector participation in sustainable and eco-friendly projects.
Abdulrahman Al-Fadhli, Saudi Arabia’s minister of environment, water, and agriculture and chairman of the Environmental Fund’s board of directors, officially introduced the program on Sunday.
The launch coincided with the unveiling of a new digital platform for the Incentives and Grants Program, designed to foster innovation and boost environmental investments.
This initiative aligns with Saudi Arabia’s Vision 2030 objectives, which focus on promoting environmental sustainability and enhancing the quality of life.
Munir bin Fahd Al-Sahli, CEO of the Environmental Fund, emphasized that the financing program is aimed at attracting private sector investments to strengthen environmental infrastructure and meteorological services. He also noted that the program will encourage businesses across various sectors to adopt sustainable practices through innovative financial solutions.
Al-Sahli described this partnership as a major step forward in funding environmental projects, highlighting that the new platform would offer incentives and support for outstanding environmental initiatives. These efforts are part of a broader national strategy to protect the environment and foster sustainable development.
The financing program represents a significant milestone in enhancing environmental investments in the Kingdom. It provides businesses and entrepreneurs with resources and incentives to develop projects that not only improve quality of life but also contribute to sustainable environmental growth.
The new electronic platform for the Incentives and Grants Program, which was launched alongside the financing initiative, is designed to streamline the process for beneficiaries and ensure efficient execution of environmental projects. The platform aims to promote eco-friendly practices, foster innovation, and encourage investment in the environmental sector, while also ensuring regulatory compliance across various industries.
Al-Sahli reiterated the fund’s commitment to offering both financial and technical support to ensure lasting positive impacts on the environment. He urged stakeholders in the environmental sector to explore the various opportunities available through the platform.
The Incentives and Grants Program is expected to drive investment in environmental projects and improve compliance levels among institutions. It will provide grants and incentives to a broad range of entities, including small and medium-sized enterprises, corporations, research centers, universities, and nonprofit organizations.
The Environmental Fund continues to develop and implement programs focused on protecting natural resources, reducing pollution, and raising environmental awareness. Through collaborations with government and private entities, it strives to balance economic growth with environmental conservation.
Saudi Arabia’s inflation holds steady at 2% in February: GASTAT
RIYADH: Saudi Arabia’s inflation held firm at 2 percent year on year in February, driven largely by rising housing costs, official data showed.
According to the General Authority for Statistics, the increase was fueled by an 8.5 percent surge in housing rents, contributing to a 7.1 percent overall rise in the housing, water, electricity, gas, and fuels category.
The inflation rate remains consistent with Saudi Arabia’s efforts to balance economic growth with price stability as the Kingdom advances its Vision 2030 strategy, which aims to diversify the economy beyond oil.
The government’s November 2024 budget forecast anticipated inflation to hold steady at 1.9 percent in 2025, up slightly from 1.7 percent in 2024. Meanwhile, the World Bank projected a stable 2.3 percent rate this year, below the Gulf Cooperation Council average.
“On a monthly basis, the consumer price index in February 2025 recorded relative stability compared to January 2025, rising by 0.2 percent due to the increase of housing, water, electricity, gas, and other fuels section by 0.4 percent, driven by a 0.4 percent increase in actual housing rent prices,” said GASTAT.
Sector breakdown
Food and beverage prices saw a modest rise of 1 percent, largely influenced by a 3.7 percent increase in meat and poultry costs. Personal goods and services climbed 3.9 percent, bolstered by a 26.7 percent jump in jewelry prices.
Restaurant and hotel costs edged up 0.8 percent year on year, while furniture and home equipment prices dropped 2.5 percent. Clothing and footwear prices declined 1 percent, led by a 2.4 percent drop in ready-made clothing.
Transportation costs also dipped 1.5 percent compared to February 2024.
On a monthly basis, consumer prices remained stable overall, with food and beverages slipping 0.2 percent. Personal goods and services rose 0.7 percent, while health and tobacco prices held steady.
Wholesale Price Index
In a separate report, GASTAT noted that Saudi Arabia’s Wholesale Price Index increased 1.5 percent year on year in February, driven by a 3.4 percent rise in other transportable goods prices and a 3.9 percent increase in agriculture and fishery products.
Food products, beverages, tobacco, and textiles fell by 0.1 percent year on year, while metal products, machinery, and equipment prices dipped 0.5 percent. Ores and minerals costs dropped 1.9 percent.
Compared to January, the WPI declined 0.5 percent, led by a 1.4 percent fall in other transportable goods prices, excluding metal products, machinery, and equipment. Food products, beverages, tobacco, and textiles also saw a marginal 0.1 percent drop, while agriculture and fishery product costs rose 1.6 percent.
Arab region’s GDP climbs 1.8% to $3.6tn in 2024 despite challenges
RIYADH: The Arab region’s gross domestic product increased by 1.8 percent, reaching $3.6 trillion in 2024, despite facing regional challenges, according to new data.
The report, released by the Arab Investment and Export Credit Guarantee Corporation or Dhaman, showed that growth was primarily concentrated in Saudi Arabia, the UAE, Egypt, Iraq, and Algeria, which together accounted for over 72 percent of the region’s total GDP, as reported by the Kuwait News Agency.
This aligns with Moody’s January forecast that oil production and major investment projects will drive a 0.8 percentage point increase in annual economic growth across the Middle East and North Africa in 2025.
It also corresponds with Moody’s projection of 2.9 percent growth for the region in 2025, up from 2.1 percent in 2024, while maintaining a stable outlook on the region’s sovereign credit fundamentals for the next 12 months.
The data also indicated positive outlooks for the Arab economy’s performance in 2025, with an expected growth rate of 1.4 percent.
This growth is likely to be driven by expansion in 14 Arab countries, including nine oil-producing economies that together contribute more than 78 percent of Arab GDP.
There is cautious optimism surrounding the potential reduction in regional unrest and conflicts, along with an expected improvement in revenues from oil, gas, and exports of goods and services produced by the region.
In January, Moody’s emphasized that the impact of large investments in 2025 will be most evident in Saudi Arabia, driven by significant government and sovereign wealth fund spending related to the Vision 2030 diversification program.
Moody’s also noted that the pick-up in the MENA economy will be primarily fueled by stronger growth among hydrocarbon exporters, as a result of the partial unwinding of strategic oil production cuts under the OPEC+ agreement.
According to Moody’s, real GDP growth for hydrocarbon-exporting nations is expected to rise to 3.5 percent in 2025, up from 1.9 percent in 2024. This boost will be driven by countries like Saudi Arabia, the UAE, Iraq, Kuwait, and Oman easing the oil production cuts implemented in 2023.
Oil exports propel Oman’s trade surplus to $19.4bn
- Saudi Arabia ranked second for Omani non-oil exports at 849 million rials
RIYADH: Oman’s trade surplus reached 7.5 billion Omani rials ($19.4 billion) in December, up from 7.14 billion rials in November, largely driven by the oil and gas sector, according to a new report.
Preliminary data from the National Centre for Statistics and Information indicated that the increase was primarily due to higher export revenues, especially from oil and gas, despite a rise in imports.
The total value of merchandise exports in December amounted to 24.23 billion rials, reflecting a 6.8 percent increase compared to the same period in 2023, when exports were valued at 22.69 billion rials.
The growth was predominantly attributed to a rise in oil and gas exports, which reached 16.29 billion rials, an 18.4 percent increase from 13.76 billion rials in December 2023.
Meanwhile, Oman’s merchandise imports increased by 12.1 percent year on year, reaching 16.71 billion rials in December, up from 14.91 billion rials the previous year.
Despite the increase in imports, the trade balance remained positive, supported by the robust performance of the country’s energy exports.
Within Oman’s oil and gas exports, crude oil exports totaled 9.91 billion Omani rials by the end of December, marking a 0.8 percent increase from the same period in 2023.
Refined oil exports saw a significant surge of 185.5 percent, reaching 3.85 billion rials. However, liquefied natural gas exports declined by 1.9 percent to 2.53 billion rials.
Meanwhile, non-oil merchandise exports fell by 16.3 percent to 6.23 billion rials in December, down from 7.44 billion rials the previous year.
Among these, mineral products accounted for the highest value at 1.78 billion rials, but this figure represented a 36.8 percent year-on-year drop.
Exports of base metals and their products remained stable at 1.32 billion rials, increasing slightly by 0.1 percent, while plastic and rubber product exports grew by 13.3 percent to 996 million rials.
Chemical industry exports declined by 19.6 percent to 804 million rials, and exports of live animals and animal products fell 11 percent to 350 million rials. Other exports totaled 981 million rials, a decrease of 5 percent.
Re-exports from Oman increased by 14.9 percent to 1.71 billion rials by the end of December. Within this category, re-exports of food and beverage products saw a notable 30.6 percent rise to 184 million rials, while re-exports of mineral products climbed 21.3 percent to 120 million rials.
However, re-exports of transport equipment fell by 0.6 percent to 401 million rials, and electrical machinery and equipment declined by 5.4 percent to 376 million rials. Re-exports of live animals and related products also dropped by 10.1 percent to 97 million rials.
On the import side, mineral products accounted for the largest share, totaling 4.67 billion rials, an 11.3 percent increase from December 2023.
Imports of electrical machinery and equipment surged 28.9 percent to 2.93 billion rials, while base metals and their products rose 1 percent to 1.61 billion rials.
Imports of chemical products rose 3.1 percent to 1.52 billion rials, and transport equipment imports increased by 13.5 percent to 1.52 billion rials. Other imports totaled 4.47 billion rials.
The UAE remained Oman’s top trading partner for non-oil exports, with trade value rising 11 percent year-on-year to 1.05 billion rials.
The UAE also led in re-exports from Oman, which amounted to 569 million rials, and was the top source of imports into the country, totaling 3.94 billion rials.
Saudi Arabia ranked second for Omani non-oil exports at 849 million rials, followed by India at 659 million rials.
Iran was the second-largest destination for Omani re-exports at 359 million rials, with Kuwait in third at 117 million rials.
China was the second-largest exporter to Oman, with trade valued at 1.83 billion rials, followed by Kuwait at 1.69 billion rials.
In the oil sector, total crude oil exports until the end of January stood at approximately 25.82 million barrels, with an average price of $72.5 per barrel.
Oil exports accounted for 84.3 percent of total oil production, which reached 30.61 million barrels during the same period. However, crude oil exports declined by 1.5 percent compared to January 2024, when they totaled 26.2 million barrels.
Oil production also saw a 2 percent year-on-year drop, standing at 31.24 million barrels in January.
The country’s total crude oil production fell by 2.2 percent in January to 23.39 million barrels, while condensate production reached 7.22 million barrels. The daily average oil output for January stood at 987,500 barrels.
In the banking sector, total credit provided by conventional commercial banks in Oman grew by 4.8 percent by the end of December. Private sector credit rose by 3.6 percent, reaching 20.7 billion rials.
Investment by conventional banks in securities also saw a notable increase, rising 20.5 percent to approximately 6 billion rials.
This included a 7.3 percent rise in investments in government development bonds to 2 billion rials and a 30.3 percent surge in foreign securities investments to 2.3 billion rials.
On the liabilities side, total deposits at conventional commercial banks increased by 6.2 percent to 25.1 billion rials by the end of December.
Government deposits rose by 5.3 percent to 5.3 billion rials, while public sector institution deposits grew by 11 percent to 2.5 billion rials. Private sector deposits, which made up 65.3 percent of total deposits, climbed 4.9 percent to 16.4 billion rials.
