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Saudi Arabia, Russia to Continue Voluntary Cuts to Support Oil Market Stability

Voluntary cuts to enhance the OPEC+ precautionary efforts to stabilize oil markets. (Asharq Al-Awsat)
Voluntary cuts to enhance the OPEC+ precautionary efforts to stabilize oil markets. (Asharq Al-Awsat)
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Saudi Arabia, Russia to Continue Voluntary Cuts to Support Oil Market Stability

Voluntary cuts to enhance the OPEC+ precautionary efforts to stabilize oil markets. (Asharq Al-Awsat)
Voluntary cuts to enhance the OPEC+ precautionary efforts to stabilize oil markets. (Asharq Al-Awsat)

Saudi Arabia and Russia have said they were continuing voluntary oil cuts of 1.3 million barrels per day (bpd) to year-end.

Saudi Arabia on Wednesday extended its one million bpd voluntary crude oil production cut until the end of the year 2023.

An official source at the Ministry of Energy announced that the Kingdom would continue with its voluntary oil output cut of one million bpd for the month of November and until the end of the year and that it would review the decision again next month.

The Kingdom’s production for November and December will be approximately 9 million bpd, the ministry said in a statement.

The source also explained that this reduction is in addition to the voluntary reduction that the Kingdom had previously announced in April 2023 and which extends until the end of December 2024.

The ministry source confirmed that this additional voluntary reduction comes to strengthen the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets.

Saudi Arabia first implemented the additional voluntary cut in July and has since extended it on a monthly basis.

Saudi Energy Minister Prince Abdulaziz bin Salman, who chairs the Joint Ministerial Monitoring Committee (JMMC), last month said OPEC+ cuts were needed to stabilize the market, and prices were not being targeted.

Deputy Prime Minister Alexander Novak said that Russia will continue the voluntary export cut of 300,000 bpd until the end of December too, as previously announced.

On output, he said: “Next month, a market analysis will be carried out in order to make a decision on whether to deepen the reduction or increase oil production.”

Novak said that joint oil supply cuts by Saudi Arabia and Russia had helped to balance global oil markets.

He also said Russia’s ban on gasoline and diesel exports had had a positive effect on the domestic fuel market.

The JMMC held a meeting via videoconference on Wednesday and made no changes to the group's oil output policy.

“The committee will continue to closely assess market conditions,” noting that the countries “stand ready to take additional measures at any time, building on the strong cohesion of OPEC and participating non-OPEC oil-producing countries.”

“The committee also expressed its full recognition and support for the efforts of the Kingdom of Saudi Arabia aimed at supporting the stability of the oil market and reiterated its appreciation for the Kingdom’s additional voluntary cut of 1 million barrels per day and for extending it till end of December 2023.”

“The committee also acknowledged the Russian Federation for extending its additional voluntary reduction of exports by 300 kbd till the end of December 2023.”

The next meeting of the JMMC 51st is scheduled for November 26.

The global oil market is moving on the right path towards balanced supply and demand, Kuwait’s Oil Minister Saad Al Barrak said on Wednesday.

“The world is required to increase investment in all types of energy sources, including oil, to ensure meeting the needs of growing demand, the recovery of the global economy, and energy security,” Barrak said.

He also praised the decision by Saudi Arabia and Russia to continue voluntary reduction and extending it until the end of this year, pointing to the positive impact on the balance and stability of the oil market.

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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)

Saudi Arabia’s digital advertising sector is experiencing rapid growth, but a significant portion of its revenues is leaking to foreign platforms. To maximize the impact on the national economy, experts are calling for strategies to curb this outflow and redirect it to local channels.

The importance of retaining digital ad revenues lies in the substantial size of this market. It is estimated that approximately $1 billion in ad spent is lost annually to foreign platforms, representing a considerable loss to Saudi Arabia’s economy.

Dr. Ebada Al-Abbad, CEO of Marketing and Communications at Tadafuq, a Saudi digital advertising network, told Asharq Al-Awsat that the problem stems from the fact that although advertisers, products, and audiences are often local, the largest share of financial gains goes to foreign platforms. He estimated that 70-80% of the $1.5 billion spent on digital advertising in Saudi Arabia in 2022 went to global platforms such as Google and Facebook. This results in the national economy losing nearly $1 billion annually from this sector alone.

Al-Abbad noted that government agencies in Saudi Arabia also contribute to the outflow. He explained that public sector spending on digital advertising, intended to raise awareness among citizens and residents, frequently ends up on foreign platforms. Government spending makes up about 20-25% of the total digital ad market in the Kingdom, meaning hundreds of millions of riyals leave the country annually, weakening the local digital economy.

Al-Abbad argues that Saudi Arabia needs strong local digital ad networks to keep this revenue within the national economy. These networks would help create jobs, drive innovation, and promote cultural diversity in digital content. Developing local platforms would also enhance Saudi Arabia’s digital sovereignty by ensuring that data remains within the country and is not controlled by foreign entities.

Moreover, local networks would reduce dependence on international platforms, ensuring that the economic benefits of digital advertising remain in the Kingdom, he said, stressing that this would align with Saudi Arabia’s broader Vision 2030 goals, which emphasize building a robust, diversified economy driven by local industries and digital transformation.

Globally, the digital advertising sector is growing rapidly. In 2022, worldwide spending on digital ads reached $602 billion, and it is projected to hit $876 billion by 2026. In the Middle East and North Africa (MENA) region, the digital ad market grew to $5.9 billion in 2022, with Saudi Arabia’s market accounting for over $1.5 billion.

In other countries, the digital ad sector plays a crucial role in boosting national economies. For example, in the United States, the digital advertising industry contributed $460 billion to the GDP in 2021, about 2.1% of the total. In the UK, the sector accounted for 1.8% of GDP in 2022. This shows how important digital advertising can be in driving economic growth.

One of the key challenges facing Saudi Arabia’s digital ad sector is the dominance of global platforms like Google and Facebook, which control 60% of the global digital ad market, Al-Abbad told Asharq Al-Awsat. This dominance results in a significant outflow of revenue and allows these platforms to control digital data and content. He warned that this could undermine Saudi Arabia’s national sovereignty over its digital economy.

To counter this, he emphasized that Saudi Arabia needs to build competitive local networks that can retain a larger share of the market. This will not only keep more revenue in the country but also strengthen the Kingdom’s control over its digital data and content.