NEW YORK: OPEC and allied oil-producing countries decided Thursday to maintain the amount of oil they pump to the world even as the new omicron variant casts a shadow of uncertainty over the global economic recovery from the coronavirus pandemic.
Officials from OPEC countries, led by Saudi Arabia, and their allies, led by Russia, voted to stick with a pre-omicron pattern of steady, modest monthly increases in oil releases — a pace that has frustrated the United States and other oil-consuming nations as gasoline prices rise.
The OPEC+ alliance approved an increase in production of 400,000 barrels per day for the month of January.
The fast-mutating variant led countries to impose travel restrictions when it emerged late last week. In a worst-case scenario, lockdowns triggered by omicron could cut oil demand by nearly 3 million barrels per day in early 2022, according to projections by Rystad Energy.
Positive news about drugs to treat the variant or the vaccines’ effectiveness against it could improve that outlook. But even with positive news, a decrease in oil demand is likely because “the distribution of these remedies may not actually reach all markets with extreme immediacy, which would still necessitate the lockdowns in much of the developing world,” said Louise Dickson, senior oil markets analyst for Rystad.
The price of a barrel of US benchmark crude fell with news of the variant and then fell further as OPEC+ revealed it wasn’t going to curtail production. It was about $78 a barrel a week ago and was trading at about $66 a barrel Thursday. International benchmark Brent crude followed a similar path, falling from $79 a barrel a week ago to about $69 on Thursday.
The decision by OPEC+ to stay the course sends a signal that “the group does what it says and that they will continue their policy on their own terms,” Dickson said. “It also really signals that OPEC+ needs a bit more time to really dig into the numbers on the omicron variant.”
Some analysts had predicted that the OPEC+ alliance — made up of OPEC members and allied non-members like Russia — would act cautiously Thursday, pending more clarity from medical experts on the new variant.
Before omicron’s appearance, the OPEC+ meeting had been shaping up as a potentially fraught moment in a growing dispute between oil-supplying nations and oil-consuming ones, as the global economy rebounds from the worst of the pandemic downturn and demand for oil surged.
Angering the US and its allies, OPEC+ has stuck to a plan to open the petroleum taps bit by bit — even as oil prices surged to seven-year highs — until deep production cuts made during the depths of the pandemic are restored.
With rising gas prices putting him under political pressure at home, President Joe Biden last week responded to OPEC’s refusal to increase supplies more quickly by announcing the US and other nations would release tens of millions of barrels of oil from their strategic reserves, boosting supplies and temporarily lowering prices. But gasoline prices in the US barely moved.
And then, omicron’s emergence unsettled those dynamics.
White House press secretary Jen Psaki said Thursday that there are no plans to slow releases from strategic reserves, despite the advent of the variant and OPEC’s decision.
“We welcome the decision today to continue the 400,000 barrels-per-day increase,” Psaki said. “We believe this should help facilitate the global economic recovery.”
OPEC+ will meet again Jan. 4.
OPEC+ sticks to modest boost in oil output despite omicron
https://arab.news/j5dy2
OPEC+ sticks to modest boost in oil output despite omicron
France congratulates new Lebanon president, calls for ‘strong government’
- French foreign ministry said Joseph Aoun's election “opens a new page" for Lebanon
PARIS: France on Thursday welcomed the election by Lebanese lawmakers of army chief Joseph Aoun as president after a two-year vacuum at the top, urging the formation of a strong government to drag the country out of a political and economic crisis.
Extending France’s “warm congratulations” to Aoun, the French foreign ministry said his election “opens a new page for the Lebanese” and urged “the appointment of a strong government” that can help the country recover.
Pakistan hopes Afghanistan joins other Islamic countries at girls’ education summit
- Pakistan to host global conference on girls education in Islamabad from Jan. 11-12
- No justification for restricting women’s education in Islam, says education minister
ISLAMABAD: Pakistan’s education minister on Thursday hoped Afghanistan would join representatives from 47 other Islamic countries and attend the upcoming global conference on girls’ education in Muslim countries, scheduled to be held later this week in Islamabad.
Pakistan’s education ministry will host the global conference titled: “Girls’ Education in Muslim Communities: Challenges and Opportunities” from Jan. 11-12 in Islamabad. Pakistan’s foreign office said on Wednesday that 150 representatives from 47 countries, including education experts, religious scholars, diplomats, and politicians are expected to partake in the summit.
Since the Afghan Taliban seized Kabul in August 2021, women and girls have been gradually barred from attending secondary school and university, undertaking most forms of paid employment, and attending public spaces such as public parks or gyms by the government there.
“We have extended an invitation to Afghanistan to participate in this conference and hope that their delegation will attend, as it is a very important neighboring country,” Education Minister Khalid Maqbool Siddiqui told reporters during a media briefing in Islamabad.
Since the Taliban’s return to power in 2021, at least 1.4 million Afghan girls have been denied access to secondary education, according to a report by the United Nations International Children’s Emergency Fund (UNICEF) released in August last year.
The minister said everyone respects tribal customs and cultures, but all such practices must align with Islamic values in Muslim countries, adding that nothing holds precedence over them.
“In Islam, there is no justification for restricting women’s education,” Siddiqui said.
He said that while the conference will officially kick off on Saturday, a session of the world’s religious scholars on girls’ education, chaired by the religion minister, will take place on Friday.
Siddiqui said the Muslim World League, the Organization of Islamic Cooperation and key Islamic countries are actively participating in this event.
“Malala Yousafzai, a renowned activist for girls’ education, will also participate in this conference,” he said, adding that experts and representatives from diplomatic missions in Islamabad from non-Muslim countries will also attend the event.
Describing the objective of the conference, he said the primary aim of the conference is to stress the implementation of the Islamic message, which clearly states that both men and women have the right to education.
“By promoting girls’ education, we can build better homes, a better society and a stronger nation,” he said.
He said education in Pakistan was currently in an emergency state as millions of children were out of school and needed important steps to deal with this situation.
Siddiqui said that an “Islamabad Declaration” will be announced after the conference on Sunday.
“This declaration will outline decisive steps to transform the trends of girls’ education in Islamic countries by mobilizing all available resources,” he said.
Prime Minister Shehbaz Sharif will inaugurate the event and deliver the keynote address at the opening session on Jan. 11.
Pakistan’s foreign office said Sharif will reaffirm the nation’s commitment to promoting girls’ education and gender equality.
Directorate imposes new exit visa requirement
- Directorate addressed employers, stating that if a resident identity is valid for fewer than 30 days, the final exit visa may not be issued
- Resident identity must be renewed for the issuance of the final exit visa
RIYADH: The Saudi General Directorate of Passports has said that resident identities must be valid for at least 30 days when applying for a final exit visa.
The directorate addressed employers, stating that if a resident identity is valid for fewer than 30 days, the final exit visa may not be issued. In that case, the resident identity must be renewed for the issuance of the final exit visa.
It noted that if a resident identity is valid for more than 30 days and fewer than 60 days, a final exit visa may be issued for the resident identity’s remaining period.
If the resident identity is valid for 60 days or more, the final exit visa may be issued for 60 days only.
The directorate noted that employers may issue final exit visas for their sponsored workers or affiliated family members through the Ministry of Interior’s Absher Business platform, and the Muqeem portal.
SABIC, Almarai, SEC able to absorb fuel price hike: S&P Global
RIYADH: Major Saudi companies, including chemical company SABIC, dairy firm Almarai, and Saudi Electric Co., are well-positioned to handle the impact of higher fuel and feedstock prices introduced on Jan. 1, according to a new report.
Released by capital market economy firm S&P Global, the analysis reveals that those corporates will be able to absorb the marginal increase in production costs by further improving operational efficiencies as well as potentially via pass-through mechanisms.
This came after Saudi Aramco increased diesel prices in the Kingdom to SR1.66 ($0.44) per liter, effective Jan. 1, marking a 44.3 percent rise compared to the start of 2024. The company has kept gasoline prices unchanged, with Gasoline 91 priced at SR2.18 per liter and Gasoline 93 at SR2.33 per liter.
Despite the hike, diesel prices in Saudi Arabia remain lower than those in many neighboring Arab countries. In the UAE and Qatar, a liter of diesel is priced at $0.73 and $0.56, respectively, while in Bahrain and Kuwait, it costs $0.42 and $0.39 per liter.
“For SABIC and Almarai, the increase in feedstock prices will not affect profitability significantly. In the case of utility company, SEC, additional support will likely come from the government if needed,” the report said.
The capital market economy firm projects that SABIC will continue to outperform global peers on profitability.
“We don’t expect the rise in feedstock and fuel prices to materially affect profitability, since the company estimates it will increase its cost of sales by only 0.2 percent,” the report said.
It further highlighted that SABIC is considered a government-related entity with a high possibility of receiving support when needed.
The report also underlines that Almarai anticipates an additional SR200 million in costs for 2025, driven by higher fuel prices and the indirect effects of increased expenses across other areas of its supply chain.
“We believe Almarai will continue focusing on business efficiency, cost optimization, and other initiatives to mitigate these impacts,” the release stressed.
With regards to SEC, S&P said that an unrestricted and uncapped balancing account provides a mechanism for government support, including related to the higher fuel costs.
“We believe any increased fuel cost will be covered by this balancing account,” the report said.
The study further highlights that the marginal increase “could significantly affect wider Saudi corporations’ profit margins and competitiveness.”
The S&P data also suggests that additional costs will be reflected in companies’ financials from the first quarter of 2025.
“Saudi Arabia is continuing its significant and rapid transformation under the country’s Vision 2030 program. We expect an acceleration of investments to diversify the Saudi economy away from its reliance on the upstream hydrocarbon sector,” the report said.
“The sheer scale of projects — estimated at more than $1 trillion in total — suggests large funding requirements. Higher feedstock and fuel prices would help reduce subsidy costs for the government, with those savings potentially redeployed to Vision 2030 projects,” it added.
Putin says more needs to be done to clean up Black Sea oil spill
- The oil leaked from two aging tankers after they were hit by a storm on Dec. 15 in the Kerch Strait
- One sank and the other ran aground
MOSCOW: Russian President Vladimir Putin said on Thursday that more needed to be done to clean up an oil spill in the Black Sea, saying efforts so far appeared to have been insufficient to deal with the ecological disaster.
The oil leaked from two aging tankers after they were hit by a storm on Dec. 15 in the Kerch Strait. One sank and the other ran aground.
Approximately 2,400 metric tons of oil products spilled into the sea, Russian investigators said last week, in what Putin on Thursday called “one of the most serious environmental challenges we have faced in years.”
When the disaster struck, state media reported that the stricken tankers, both more than 50-years old, were carrying some 9,200 metric tons (62,000 barrels) of oil products in total.
Since the spill, thousands of emergency workers and volunteers have been working to clear tons of contaminated sand and earth on either side of the Kerch Strait. Environmental groups have reported deaths of dolphins, porpoises and sea birds.
The Kerch Strait runs between the Black Sea and the Sea of Azov and separates Crimea’s Kerch Peninsula from Russia’s Krasnodar region.
Putin told a government meeting that the clean-up efforts had been poorly coordinated between regional and federal bodies.
“From what I see and from the information I receive, I conclude that everything being done to minimize the damage is clearly not enough yet,” the Kremlin leader told officials.
He called for a commission to be formed to mitigate the disaster and prevent oil products from leaking from flooded tankers in the future.
