Saudi Arabia Reduces Oil Production to 9 Million bdp to Support Market

Officials, including Saudi Energy Minister Prince Abdulaziz bin Salman (center), at the OPEC+ meeting in Vienna on Sunday. (Twitter)
Officials, including Saudi Energy Minister Prince Abdulaziz bin Salman (center), at the OPEC+ meeting in Vienna on Sunday. (Twitter)
TT
20

Saudi Arabia Reduces Oil Production to 9 Million bdp to Support Market

Officials, including Saudi Energy Minister Prince Abdulaziz bin Salman (center), at the OPEC+ meeting in Vienna on Sunday. (Twitter)
Officials, including Saudi Energy Minister Prince Abdulaziz bin Salman (center), at the OPEC+ meeting in Vienna on Sunday. (Twitter)

Saudi Arabia decided to voluntarily reduce its oil production by 1.5 million barrels per day, to the level of 9 million barrels per day, to support oil markets in light of the uncertainty surrounding the global economy.  

An official source in the Saudi Ministry of Energy said on Sunday that the additional voluntary cuts in the Kingdom’s oil production, by one million barrels per day, would take effect as of July and for a month that can be extended.  

During a meeting on Sunday, OPEC+ countries decided to adjust their production level to 40.4 million barrels per day, starting from January 2024 for a period of one year, and agreed to reduce oil production by 3.66 million barrels per day, announced Russian Deputy Prime Minister Alexander Novak.  

The new voluntary cut by Saudi Arabia comes in addition to the OPEC+ agreement. 

The Kingdom described the move as a “precautionary measure”, through which it will extend its voluntary cut of 500,000 barrels per day until the end of December 2024, in coordination with some countries participating in the OPEC+ agreement.  

UAE Minister of Energy Suhail Al Mazrouei immediately announced that his country would extend its voluntary reduction in oil production of 144,000 barrels per day until the end of December 2024.  

“The extension of the voluntary reduction in production comes in coordination with the countries participating in the OPEC+ agreement,” he stated.  

Iraq also announced its commitment to the voluntary cut of its oil production of 211,000 barrels per day. Oman and Algeria also decided to cut their production by 40,000 barrels and 48,000 barrels per day, respectively.  

Following Sunday’s meeting, Novak said his country would extend its voluntary cut in oil production of 500,000 barrels per day until the end of 2024.  

The cuts will be as a precautionary measure, in coordination with the countries participating in the OPEC+ agreement, which had previously announced voluntary cuts in April, he added.  

“This voluntary cut will be from the required production level, as agreed upon at the thirty-fifth ministerial meeting of OPEC+ on June 4, 2023,” Novak stressed.  

He underscored the ability to “adjust our decisions” to stabilize the oil market, referring to economic developments in China.  

“We are closely monitoring China's recovery from the repercussions of the COVID-19 pandemic,” he remarked.  

A press release posted on Sunday on the OPEC website stated that an agreement was reached to hold the OPEC+ ministerial meeting every six months. The next meeting will be held in Vienna on November 26. 

The Joint Ministerial Monitoring Committee was granted the authority to hold additional meetings, or to request a ministerial meeting for the group at any time to meet “market developments whenever necessary.”  



Saudi Arabia Implements Real Estate Regulations to Stabilize Riyadh’s Market

The Saudi capital, Riyadh (SPA)
The Saudi capital, Riyadh (SPA)
TT
20

Saudi Arabia Implements Real Estate Regulations to Stabilize Riyadh’s Market

The Saudi capital, Riyadh (SPA)
The Saudi capital, Riyadh (SPA)

Amid rapid growth in Saudi Arabia’s real estate sector, fueled by the country’s economic diversification strategy, Crown Prince Mohammed bin Salman has introduced a series of regulatory measures in Riyadh. These steps aim to balance the capital’s real estate market, demonstrating the leadership’s commitment to providing sustainable and effective solutions for challenges in this vital sector.

Experts told Asharq Al-Awsat that rising property prices remain one of the biggest challenges in the real estate market. According to the General Authority for Statistics (GASTAT), the Real Estate Price Index increased by 3.6% in Q4 2024—the highest quarterly growth in six quarters—mainly driven by the residential sector, which accounts for 72.7% of the index.

Several factors are contributing to rising prices, including high demand for housing in major cities, large-scale development projects attracting investment, and improvements in infrastructure that increase property values.

Following an in-depth study by the Royal Commission for Riyadh City and the Council of Economic and Development Affairs, the Crown Prince’s directives focus on increasing housing supply and regulating market fluctuations to ensure fairness and stability.

Key Real Estate Measures

The newly announced policies include lifting restrictions on real estate transactions and development in several areas of Riyadh, covering 81.48 square kilometers. To meet housing demand, authorities plan to allocate between 10,000 and 40,000 residential plots annually over the next five years, with a price cap of SAR1,500 per square meter. Priority will be given to married citizens and individuals over 25 who do not own property, with applications processed through a new digital platform developed by the Royal Commission for Riyadh City.

To prevent speculative trading, new regulations restrict the sale, leasing, or mortgaging of land for ten years, except for construction financing. If a project is not completed within this period, the land will be reclaimed at its original purchase price.

Minister of Municipal, Rural Affairs, and Housing Majid Al-Hogail emphasized that these measures will help balance supply and demand while also revising the White Land Tax program to encourage property development. He also confirmed a comprehensive review of rental regulations, with amendments expected within 90 days.

Strong Demand for Real Estate

A report by JLL, a global real estate services firm, highlighted that despite a slowdown in construction projects across the Middle East and Africa in 2024, Saudi Arabia remained a strong performer. The Kingdom accounted for SAR29.5 billion in construction contracts, with significant activity in the hospitality, mixed-use, and entertainment sectors. The residential sector also performed well, with SAR7.9 billion in awarded contracts.

As Saudi Arabia prepares to host major global events, it may face challenges related to capacity and rising costs between 2025 and 2028. However, the government is addressing these issues by localizing industries, expanding infrastructure investments, accelerating digital transformation, and implementing regulatory reforms, with a focus on renewable energy and sustainability.

JLL’s Head of Projects and Development Services in Saudi Arabia, Maroun Dib, noted that strategic projects under Vision 2030 will continue attracting massive investments, creating expansion opportunities in the real estate sector. He added that major events like the FIFA World Cup and Expo will drive significant capital inflows, strengthening infrastructure development and setting the real estate sector on a solid growth trajectory beyond 2025.

Speaking to Asharq Al-Awsat, Khaled Al-Mobayed, CEO of Manassat Real Estate, stressed the importance of increasing housing supply to meet growing demand. He warned that failing to do so could lead to rising rental prices. Al-Mobayed suggested that expanding real estate development into smaller cities near major urban centers could ease pressure on large cities while providing affordable housing options.

Riyadh’s hospitality sector is experiencing rapid growth, driven by business tourism and international events. Average hotel room rates rose by 13.3% in 2024 to SAR239 per night, with 2,312 new hotel rooms expected in 2025. In Jeddah, religious and leisure tourism remains strong, supporting long-term growth despite minor market fluctuations.

Meanwhile, the retail sector in Riyadh is shifting toward experiential shopping, as consumers seek entertainment-driven retail experiences. Traditional shopping malls—especially enclosed malls—are facing declining occupancy rates. While large malls saw a 1.8% increase in lease rates in Q4 2024, community malls experienced stronger growth at 5.5%, whereas regional malls declined by 9.3%. A similar trend is visible in Jeddah, highlighting the need for more diverse and interactive retail spaces.

Industrial and Logistics Sectors on the Rise

Rising rental rates in the industrial and logistics sectors in Riyadh and Jeddah indicate strong market demand, fueled by economic diversification and the growth of e-commerce.

Additionally, the data center sector is rapidly expanding, driven by 5G technology and artificial intelligence. Riyadh, Dammam, and Jeddah now rank third in the Middle East and Africa for operational co-location data centers, contributing 12.6% of the region’s total IT capacity (1,050 megawatts) by the end of 2024. This positions Saudi Arabia for further digital infrastructure expansion.