DUBAI: Amin Nasser, president and chief executive of Saudi Aramco, expects a continuing improvement in the global oil market after the most difficult time he has ever seen in the energy business.
Nasser, speaking to Energy Intelligence ahead of a conference this week, said the events of the past six months — when oil demand was severely affected by worldwide economic lockdowns — were unlike any other cyclical downturn in crude markets.
“It’s completely different. My generation hasn’t seen anything like this. I don’t think the world has seen anything like this. If you look at the economic impact and what happened across the world, this is clearly significant,” he said.
But he said there were signs that the worst was over, despite the threat of second wave impacts from the COVID-19 pandemic. “At this stage we see the recovery picking up but, of course, this depends on whether there is a vaccine and how soon it will be available, if there is a second wave and how significant. We could see some back and forth, but there are good signs and we’re expecting to see a better market in the fourth quarter and next year,” he said.
In April daily global demand crashed from around 100 million barrels per day (bpd) to between 75 million and 80 million, and West Texas Intermediate crude, the American benchmark, fell briefly to minus $40 a barrel, meaning producers would pay customers to take oil away.
“It is encouraging to see that the worst is over and demand has sharply recovered from those exceptionally low levels. If you look at the forecasts from the International Energy Agency, they show demand recovering to 96 million by the fourth quarter of this year and 99 million toward the end of next year,” Nasser said.
The recovery was especially strong in Asia, he added. “What we see in Asia, especially China, which is our biggest market, is a strong recovery. In China, almost all demand for oil products is back to pre-COVID levels, except for jet fuel.”
Aramco, which listed on the Saudi Arabia stock market last year to become the world’s most valuable oil company, is monitoring its financial position in light of the revenue decline from low prices.
“We have intensified our cost discipline and are focusing on capital flexibility. We are being very prudent when it comes to capital spending, adhering to strict capital discipline. We are looking at all of our projects and stretching some discretionary ones out where necessary, while maintaining our maximum sustained capacity of 12 million bpd. Also, we are continuing to expand our gas portfolio in the Kingdom,” Nasser said.
“A lot of focus is on capital discipline and maximizing value for our shareholders. That’s what we have demonstrated in the first and second quarters, despite difficult conditions, while meeting our commitment when it came to dividends.”
He added that there were opportunities to “squeeze more value” from its existing assets, especially in downstream operations. Some energy experts have suggested Aramco should spin off or refinance assets such as its pipeline business.
“We’re going to do it right and will make sure what’s executed by this organization [the new Corporate Development unit within Aramco] is in line with our longterm view, the strategy of retaining our core businesses in-house and what can be optimized with our partners. This involves a careful review process that will take some time,” Nasser said.
He will be named Energy Executive of the Year 2020 in a ceremony at the conference next week. “Nasser has guided the world’s largest oil company through a period of considerable change and upheaval in Saudi Arabia itself and in global oil markets more generally,” Energy Intelligence said.
Oil recovering from 'worst time in my generation' — Aramco president
https://arab.news/bje24
Oil recovering from 'worst time in my generation' — Aramco president
- Nasser said there were signs that the worst was over, despite the threat of second wave impacts from the COVID-19 pandemic
- He will be named Energy Executive of the Year 2020 in a ceremony at the conference next week
Middle East airlines witness 3.3% passenger demand growth in February: IATA
RIYADH: Airlines operating in the Middle East recorded a 3.3 percent year-on-year increase in passenger demand in February, with total flight capacity rising 1.3 percent during the same period, an industry report showed.
The latest data from the International Air Transport Association revealed global passenger demand, both domestic and international, increased by 2.6 percent over the second month of the year.
This growth comes as many Middle Eastern countries focus on boosting the aviation sector to help diversify their economies away from oil dependency, with Saudi Arabia seeking to triple passenger numbers by 2030 compared to 2019 levels.
Commenting on the latest report, Willie Walsh, director general of IATA, said: “February traffic hit an all-time high, and the number of scheduled flights is set to continue increasing in March and April.”
The association added that the total load factor among carriers in the Middle East region stood at 82 percent in February, representing a rise of 1.6 percentage points compared to the same month in 2024.
The load factor is a metric used in the aviation sector that measures the percentage of available seating capacity that has been filled with passengers.
A high load factor signifies that an airline has sold most of its available seats.
IATA also reported that carriers in the Middle East handled 9.4 percent of global passengers in February, a figure that remained unchanged from January.
Earlier this month, a report by consulting management firm Oliver Wyman stated that the fleet of commercial airlines in the Middle East is expected to grow at a compound annual growth rate of 5.1 percent from 2025 to 2035, reaching 2,557 aircraft.
It added that this growth rate in the Middle East is nearly double the annual global growth rate, which is projected at 2.8 percent during the same period.
Affirming the progress of the aviation sector in the Middle East, Saudi Arabia is set to see its newest airline – the Public Investment Fund-backed Riyadh Air – take to the skies later this year, with the aim of flying to 100 countries by 2030.
In October, Riyadh Air signed an agreement to purchase 60 Airbus A321neo single-aisle aircraft.
In the same month, the company announced plans to order wide-body aircraft capable of seating more than 300 passengers in 2025.
According to IATA, international passenger demand growth increased by 5.6 percent in February compared to the same period in the previous year.
However, international passenger demand growth was down compared to January, which witnessed a 12.3 percent rise.
The report added that global domestic demand declined by 1.9 percent year on year in February.
Africa witnessed a 6.8 percent rise in overall passenger demand, including both domestic and international, followed by Latin America at 4.6 percent, Europe at 4.3 percent, and Asia-Pacific at 4.2 percent.
Air carriers operating in North America experienced a 3.2 percent decline in passenger demand.
International passenger demand
Airlines operating in the Asia-Pacific region led international passenger demand globally, marking a 9.5 percent growth in February compared to the same month in 2024.
The total capacity of airlines in the APAC region rose by 8.3 percent year on year, while the load factor stood at 85.7 percent.
APAC airlines handled 33.5 percent of global passengers in February, followed by Europe at 26.7 percent and North America at 22.9 percent.
The report further indicated that international passenger demand among Middle East airlines increased by 3.1 percent in February compared to the same month in the previous year.
The association also noted that the capacity of airlines in the Middle East region increased by 1.3 percent, while the load factor stood at 81.9 percent in February, representing a rise of 1.4 percentage points compared to the same month in 2023.
According to IATA, international passenger demand among European air carriers rose by 5.7 percent year on year in February, while capacity increased by 4.9 percent during the same period.
North American air carriers saw a 1.5 percent decline in international passenger demand growth, with capacity also decreasing by 3.2 percent.
International passenger demand growth among Latin American airlines grew by 6.7 percent year on year in February, while capacity climbed by 9.9 percent.
African airlines saw demand growth of 6.7 percent among international travelers.
The capacity of these carriers also rose by 4 percent in February compared to the same month in 2024.
Air cargo demand growth
In a separate report, IATA revealed that air cargo demand declined slightly by 0.1 percent in February compared to the same period in the previous year, marking the first decline since mid-2023.
Overall, cargo capacity, measured in available cargo tonne-km, decreased marginally by 0.4 percent year on year in February.
The report added that international cargo capacity edged up by 1.1 percent over the month.
“February saw a small contraction in air cargo demand, the first year-on-year decline since mid-2023. Much of this is explained by February 2024 being extraordinary — a leap year that was also boosted by Chinese New Year traffic, sea lane closures, and a boom in e-commerce,” said Walsh.
He added: “Rising trade tensions are, of course, a concern for air cargo. With equity markets already showing their discomfort, we urge governments to focus on dialogue over tariffs.”
Airlines operating in the APAC region drove cargo demand growth in February.
According to IATA, cargo demand growth among APAC airlines increased by 5.1 percent year-on-year, while capacity rose by 2.7 percent during the same period.
Air carriers in the Middle East region witnessed an 11.9 percent year-on-year decrease in air cargo demand in February, the slowest among the regions.
The capacity of air carriers in the Middle East also decreased by 4 percent in February.
“North American carriers saw a 0.4 percent year-on-year decrease in demand growth for air cargo in February. Capacity decreased by 3.5 percent year-on-year,” said IATA.
The air cargo demand growth among European airlines dropped marginally by 0.1 percent in February compared to the same month in 2024, while capacity slightly edged down by 0.2 percent.
Air carriers operating in the Latin American region witnessed a 6 percent year on year cargo demand growth in February, the strongest rise among all regions. The capacity of these airlines also rose by 7.6 percent during the same period.
“African airlines saw a 5.7 percent year-on-year decrease in demand for air cargo in February. Capacity decreased by 0.6 percent year-on-year,” added IATA.
Looking at trade indicators, IATA said that the industrial production index rose 3.2 percent year-on-year in February, the highest growth in two years, while world trade expanded by 5 percent.
In February, the Purchasing Managers’ Index for global manufacturing output stood at 51.5, indicating growth.
The PMI for new export orders rose slightly to 49.6 from the previous month, remaining just shy of the 50-mark, which is the growth threshold.
The report added that jet fuel prices averaged $94.6 per barrel in February, representing a 2.1 percent decline compared to January.
Saudi firms announce 2024 financial results amid Eid trading break
RIYADH: Multiple companies have released their financial results for 2024 despite the Saudi market remaining closed for trading due to the Eid Al-Fitr holiday, which lasts until April 2.
Red Sea International Co. reported a turnaround in profitability, announcing a net profit of SR4 million ($1.07 million), compared to a net loss of SR23.1 million in 2023.
In a statement on Tadawul, the organization attributed the improvement to the full-year impact of its First Fix acquisition, along with stronger revenues and performance. Operating profit surged to SR70 million from SR6 million in the previous year.
Raydan Food Co. posted a net loss of SR73.1 million in 2024, widening from SR30.8 million in 2023, a 136.6 percent increase.
The company attributed the losses to declining sales, lower revenues from contracts and franchises, higher selling and marketing expenses, and impairment costs related to right-of-use assets and land.
Foreign currency valuation adjustments and investment impairments also contributed to the decline. Sales fell 12.4 percent to SR155.3 million due to weaker branch performance and lower contract revenues.
Osool and Bakheet Investment Co. remained profitable despite a drop in net income. The firm’s profits dropped to SR19.8 million from SR25.4 million in 2023, largely due to a 24 percent fall in total revenues.
A 31 percent reduction in expenses and a 55 percent decrease in financing costs did help offset the impact. Other income surged 152 percent to SR4.2 million, though zakat expenses rose 58 percent to SR3.8 million.
Maharah Human Resources Co. reported a robust earnings gain, with net profits rising 27.1 percent to SR127.4 million, driven by an 18 percent revenue increase and a 6 percent improvement in gross profit, supported by corporate services sector growth.
The organization benefited from an SR20 million reduction in expected credit losses and an SR11 million boost in other operating income, mainly from increased government incentives for Saudi employment.
However, higher investments in human capital pushed general and administrative expenses up by SR3.5 million, while financing costs rose by SR4 million.
Additionally, profits from associate companies, including Care Shield Holding Co. and Saudi Medical Systems Co., fell 30 percent, amounting to an SR12.2 million decline, due to weaker results from Care Shield Holding Co. and the absence of Saudi Medical Systems Co.’s financial data for the last six months of 2024.
Oil Updates — crude extends climb on supply fears, trade war concerns cap gains
SINGAPORE: Oil prices inched higher on Tuesday after threats by US President Donald Trump to impose secondary tariffs on Russian crude and attack Iran, though worries about the impact of a trade war on global growth capped gains.
Brent futures rose 21 cents, or 0.3 percent, to $74.98 a barrel at 9:45 a.m. Saudi time, while US West Texas Intermediate crude futures climbed 22 cents, or 0.3 percent, to $71.70.
The contracts settled at five-week highs a day earlier.
“Near-term risks are skewed to the upside, with US threats of secondary tariffs on Russian and Iranian oil leading market participants to price for the risks of tighter oil supplies,” said Yeap Jun Rong, market strategist at IG.
However, broader themes still revolve around concerns of upcoming tariffs weighing on global demand, along with prospects of increased supply from OPEC+ and the US, said Yeap.
A Reuters poll of 49 economists and analysts in March projected that oil prices would remain under pressure this year from US tariffs and economic slowdowns in India and China, while OPEC+ increases supply.
Slower global growth would dent fuel demand, which might offset any reduction in supply due to Trump’s threats.
After news of Trump’s threats initially boosted prices on Monday, traders told Reuters they viewed the president’s warnings to Russia, at least, as a bluff.
Trump, on Sunday, told NBC News that he was very angry with Russian President Vladimir Putin and would impose secondary tariffs of 25 percent to 50 percent on Russian oil buyers if Moscow tries to block efforts to end the war in Ukraine.
Tariffs on buyers of oil from Russia, the world’s second largest oil exporter, would disrupt global supply and hurt Moscow’s biggest customers, China and India.
Trump also threatened Iran with similar tariffs and bombings if Tehran did not reach an agreement with the White House over its nuclear program.
“For now, it appears to be just a threat to Russia and Iran. However, if it becomes a reality, it creates plenty of upside risk to the market given the significant oil export volumes from both countries,” said ING commodities strategists on Tuesday.
The market will be watching for weekly inventory data from US industry group the American Petroleum Institute later on Tuesday, ahead of official statistics from the Energy Information Administration on Wednesday.
Five analysts surveyed by Reuters estimated on average that US crude inventories fell by about 2.1 million barrels in the week to March 28.
Saudi real estate sector playing key role in GDP growth: Minister
RIYADH: Saudi Arabia’s expanding real estate sector is contributing directly to the growth of the Kingdom’s gross domestic product, according to the minister of economy and planning.
Faisal Al-Ibrahim told Al-Arabiya Business that the Saudi government has created an enabling environment for the private sector, allowing it to focus on qualitative investment in real estate development.
Those remarks come amid a broader government effort to stabilize the real estate market in Riyadh. Over the weekend, Crown Prince Mohammed bin Salman announced a series of measures aimed at addressing rising land prices and rental costs, including lifting restrictions on land transactions and development in northern Riyadh.
The initiative, based on studies by the Royal Commission for Riyadh City and the Council of Economic and Development Affairs, seeks to increase housing accessibility, regulate market dynamics, and ensure sustainable growth in the sector.
In his remarks, Al-Ibrahim also highlighted the importance of cost regulation in supporting the private sector, enhancing market competitiveness, and driving sustainable economic growth.
Regarding upcoming policies and regulations, he said: “All legislative measures will be announced in due course, and their impact will be monitored in a structured and institutionalized manner to ensure they achieve the desired objectives.”
According to an analysis by real estate services firm JLL released at the end of March, the Saudi real estate sector is poised for further expansion, driven by Vision 2030’s economic diversification goals.
The firm said that the Kingdom’s non-oil sector is projected to grow by 5.8 percent in 2025, up from 4.5 percent in 2024.
The report highlighted Saudi Arabia’s strong construction activity, with project awards totaling $29.5 billion in 2024. A strong real estate market is critical for the Kingdom’s ambitions to position itself as a global hub for tourism and business.
The property market is projected to reach $101.62 billion by 2029, growing at an annual rate of 8 percent from 2024.
Despite global economic headwinds, JLL’s country head for Saudi Arabia, Saud Al-Sulaimani, emphasized that Vision 2030’s strategic diversification efforts are attracting both domestic and international capital.
Key sectors, particularly in Riyadh and Jeddah, are seeing sustained demand, with tourism and infrastructure initiatives further stimulating investment.
Stocks slide; bonds, gold buoyed as tariffs stoke recession fears
- STOXX 600 falls 1.7 percent, US futures lower
- Nikkei dives over 4 percent
- Trump says US tariffs to cover all countries
LONDON: Major global share markets fell sharply on Monday and gold surged to another new record after US President Donald Trump said tariffs would essentially cover all countries, stoking worries a global trade war could lead to a recession.
Trump’s comments to reporters on Air Force One seemed to dash hopes the levies would be limited to a smaller group of countries with the biggest trade imbalances.
Trump is due to receive tariff recommendations on Tuesday and announce initial levels on Wednesday, followed by auto tariffs the day after.
“What the Trump administration has shown us so far is that you should not expect a consistent approach,” said George Lagarias, chief economist at Forvis Mazars.
“This is what scares the market the most. Inconsistency breeds uncertainty, and markets hate uncertainty.”
Europe’s STOXX 600 fell 1.7 percent to its lowest level in almost eight weeks, while major indexes in Frankfurt, London and Paris fell between 1.3 percent and 2 percent.
S&P 500 futures lost over 1 percent, extending losses after Friday’s 2 percent drop, while Nasdaq futures shed 1.5 percent.
Japan’s Nikkei led the rout in Asia, losing an eye-watering 4.1 percent and falling to a six-month low as automaker stocks continued to suffer fallout from Trump’s talk of 25 percent tariffs on imported cars.
MSCI’s broadest index of Asia-Pacific shares outside Japan shed 1.9 percent.
Seeking any safe harbor from the trade storm, investors piled into sovereign bonds and the Japanese yen and pushed gold prices to another all-time high.
“For the first time in years, we find ourselves genuinely worried about risk assets,” said Ajay Rajadhyaksha, head of rates markets at Barclays.
“If policy chaos and trade wars worsen much further, a recession is now a realistic risk across major economies,” he added. “For the first time in many quarters, we favor core fixed income over global equities.”
That “R” word
Many economists are worried that tariffs will hit the US economy hard, even as they limit the Federal Reserve’s scope to cut rates by driving inflation in the short term.
Analysts at Goldman Sachs now see a 35 percent chance of a US recession, up from 20 percent previously, saying they expect Trump to announce reciprocal tariffs that average 15 percent across all US trading partners on April 2.
Data out on Friday underlined the risks as a key measure of core inflation rose by more than expected in February while consumer spending disappointed.
That raised the stakes for the March payrolls report due on Friday where any outcome below the 140,000 gain expected would only add to recession fears. Also due are a rush of surveys on factories and services, along with figures on trade and job openings.
Bond investors seemed to be betting the slowdown in US economic growth will outweigh a temporary lift in inflation and prompt the Fed to cut rates by about 80 basis points this year.
This, combined with a flight from risk assets, saw the 10-year Treasury yield drop as low as 4.184 percent while the two-year yield hit 3.842 percent. Germany’s 10-year yield fell as low as 2.659 percent, its lowest since March 5.
The outlook for rates could become clearer when Fed Chair Jerome Powell speaks on Friday, following a host of other Fed speakers this week.
The drop in US yields saw the dollar ease 0.4 percent to 149.30 yen, while the euro held at $1.08. The dollar index was steady at 104.05, having slipped for the previous two sessions.
The perceived safety of gold saw the metal hit another all-time high at $3,128.06 an ounce.
