Experts to Asharq Al-Awsat: Saudi Arabia Playing its Responsible Role in Controlling Oil Market

Workers are seen at a Saudi Aramco facility. (SPA)
Workers are seen at a Saudi Aramco facility. (SPA)
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Experts to Asharq Al-Awsat: Saudi Arabia Playing its Responsible Role in Controlling Oil Market

Workers are seen at a Saudi Aramco facility. (SPA)
Workers are seen at a Saudi Aramco facility. (SPA)

Saudi Arabia announced on Monday its decision to extend the voluntary oil production cut of one million barrels per day until August. Saudi analysts told Asharq Al-Awsat that the Kingdom’s decision would reduce fluctuations in global oil prices and strengthen the efforts of the OPEC+ alliance to support, stabilize and control international markets.

Saudi Arabia’s decision was followed by a similar step by Russia, which also announced reducing its oil exports by 500,000 barrels per day in August.

Experts stressed the importance of voluntary price cuts to achieve price stability and protect producers and consumers alike, noting that the Saudi decision also limits the contraction of global economic growth.

Dr. Mohammad al-Sabban, former senior adviser to the Saudi Energy Minister, told Asharq Al-Awsat that the Kingdom’s decision to extend the voluntary cut achieves stability in oil markets, which are witnessing great fluctuations. He also emphasized that Saudi Arabia was assuming a responsible role in controlling markets, in cooperation with oil-producing countries.

Al-Sabban underscored the importance of the voluntary cut in boosting the role of OPEC+ in the markets, as it confirms that the organization is seeking to achieve stability in the global oil markets.

Economist Dr. Fahd bin Jumaa said the Kingdom, with its recent decision, confirms that it will bear the loss of sales of one million barrels per day, out of concern for market stability.

In remarks to Asharq Al-Awsat, he said: “OPEC+ is making intense efforts to achieve its goals in stabilizing the oil markets, given the global economic situation...”

An official source in the Ministry of Energy said that the Kingdom would extend the voluntary cut of one million barrels per day, which began in July, for another month, adding that the cut could be extended beyond that period.

“The Kingdom’s production for the month of August 2023 will be approximately 9 million barrels per day,” Saudi state news agency SPA quoted an official source in the ministry as saying.

Saudi Energy Minister Prince Abdulaziz bin Salman had previously stated that the cut could be “extendable.”

Shortly after Monday’s announcement, Russian Deputy Prime Minister Alexander Novak said Moscow would cut its oil exports by 500,000 barrels per day in August.

Later on Monday, Algeria said it would cut oil output by an extra 20,000 barrels from Aug. 1-31 to support Saudi Arabia and Russia’s efforts to balance and stabilize oil markets, its energy ministry said.



Firm Dollar Keeps Pound, Euro and Yen Under Pressure

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
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Firm Dollar Keeps Pound, Euro and Yen Under Pressure

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo

The US dollar charged ahead on Thursday, underpinned by rising Treasury yields, putting the yen, sterling and euro under pressure near multi-month lows amid the shifting threat of tariffs.

The focus for markets in 2025 has been on US President-elect Donald Trump's agenda as he steps back into the White House on Jan. 20, with analysts expecting his policies to both bolster growth and add to price pressures, according to Reuters.

CNN on Wednesday reported that Trump is considering declaring a national economic emergency to provide legal justification for a series of universal tariffs on allies and adversaries. On Monday, the Washington Post said Trump was looking at more nuanced tariffs, which he later denied.

Concerns that policies introduced by the Trump administration could reignite inflation has led bond yields higher, with the yield on the benchmark 10-year US Treasury note hitting 4.73% on Wednesday, its highest since April 25. It was at 4.6709% on Thursday.

"Trump's shifting narrative on tariffs has undoubtedly had an effect on USD. It seems this capriciousness is something markets will have to adapt to over the coming four years," said Kieran Williams, head of Asia FX at InTouch Capital Markets.

The bond market selloff has left the dollar standing tall and casting a shadow on the currency market.

Among the most affected was the pound, which was headed for its biggest three-day drop in nearly two years.

Sterling slid to $1.2239 on Thursday, its weakest since November 2023, even as British government bond yields hit multi-year highs.

Ordinarily, higher gilt yields would support the pound, but not in this case.

The sell-off in UK government bond markets resumed on Thursday, with 10-year and 30-year gilt yields jumping again in early trading, as confidence in Britain's fiscal outlook deteriorates.

"Such a simultaneous sell-off in currency and bonds is rather unusual for a G10 country," said Michael Pfister, FX analyst at Commerzbank.

"It seems to be the culmination of a development that began several months ago. The new Labour government's approval ratings are at record lows just a few months after the election, and business and consumer sentiment is severely depressed."

Sterling was last down about 0.69% at $1.2282.

The euro also eased, albeit less than the pound, to $1.0302, lurking close to the two-year low it hit last week as investors remain worried the single currency may fall to the key $1 mark this year due to tariff uncertainties.

The yen hovered near the key 160 per dollar mark that led to Tokyo intervening in the market last July, after it touched a near six-month low of 158.55 on Wednesday.

Though it strengthened a bit on the day and was last at 158.15 per dollar. That all left the dollar index, which measures the US currency against six other units, up 0.15% and at 109.18, just shy of the two-year high it touched last week.

Also in the mix were the Federal Reserve minutes of its December meeting, released on Wednesday, which showed the central bank flagged new inflation concerns and officials saw a rising risk the incoming administration's plans may slow economic growth and raise unemployment.

With US markets closed on Thursday, the spotlight will be on Friday's payrolls report as investors parse through data to gauge when the Fed will next cut rates.