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Oil Prices Climb amid US Stocks Decline, Mideast Conflict

FILE PHOTO: A motorist fills a car with fuel at a petrol station in Sydney August 18, 2004. REUTERS
FILE PHOTO: A motorist fills a car with fuel at a petrol station in Sydney August 18, 2004. REUTERS
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Oil Prices Climb amid US Stocks Decline, Mideast Conflict

FILE PHOTO: A motorist fills a car with fuel at a petrol station in Sydney August 18, 2004. REUTERS
FILE PHOTO: A motorist fills a car with fuel at a petrol station in Sydney August 18, 2004. REUTERS

Oil prices extended gains on Wednesday after industry data showed a surprise drop in US crude stocks last week, a positive sign for demand, though markets were also keeping a close eye on hostilities in the Middle East.
Brent crude futures rose 26 cents, or 0.29%, to $88.68 a barrel and US West Texas Intermediate crude futures climbed 26 cents, or 0.31%, to $83.62 a barrel at 0634 GMT, Reuters reported.
US crude inventories fell 3.237 million barrels in the week ended April 19, according to market sources citing American Petroleum Institute figures. In contrast, six analysts polled by Reuters had expected a rise of 800,000 barrels.
Traders will be watching for the official US data on oil and product stockpiles due at 10:30 a.m. EDT (1430 GMT) for confirmation of the big drawdown.
US business activity cooled in April to a four-month low, with S&P Global saying on Tuesday that its flash Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 50.9 this month from 52.1 in March.
"This could help convince policy makers that rate cuts are required to support the economy," ANZ analysts said in a note.
US interest rate cuts could bolster economic growth and, in turn, demand for oil from the world's top consumer of the fuel.
Analysts were still bullish that any latest developments in conflicts in the Middle East will still support markets, though the impact on oil supplies remains limited for now.
"Overall, crude oil prices are well supported around current levels by on-going Middle East risk premium. On the topside, risk of possible renewed OPEC production increase from Jun will help limit any significant upside," said head of markets strategy for United Overseas Bank (UOB) in Singapore Heng Koon How.
"We maintain our forecast for Brent to consolidate at USD 90/bbl by end of this year," Heng added.
Israeli strikes intensified across Gaza on Tuesday, in some of the heaviest shelling in weeks.
"Recent reports suggest that both Iran and Israel consider the current operations concluded against one another, with no follow-up action required for now," ING analysts said in a note.
"The US and Europe are preparing for new sanctions against Iran – although these may not have a material impact on oil supply in the immediate term," they added.

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Aramco Plans Transition Minerals Joint Venture with Ma'aden

The proposed JV would focus on energy transition minerals, including extracting lithium from high-concentration deposits and advancing cost-effective direct lithium extraction (DLE) technologies - File Photo
The proposed JV would focus on energy transition minerals, including extracting lithium from high-concentration deposits and advancing cost-effective direct lithium extraction (DLE) technologies - File Photo
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Aramco Plans Transition Minerals Joint Venture with Ma'aden

The proposed JV would focus on energy transition minerals, including extracting lithium from high-concentration deposits and advancing cost-effective direct lithium extraction (DLE) technologies - File Photo
The proposed JV would focus on energy transition minerals, including extracting lithium from high-concentration deposits and advancing cost-effective direct lithium extraction (DLE) technologies - File Photo

Aramco, one of the world's leading integrated energy and chemicals companies, and Ma'aden, the largest multi-commodity mining and metals company in the Middle East and North Africa region, announced on Wednesday the signing of non-binding Heads of Terms, which envisages the formation of a minerals exploration and mining joint venture (JV) in Saudi Arabia.
According to a press release, the proposed JV would focus on energy transition minerals, including extracting lithium from high-concentration deposits and advancing cost-effective direct lithium extraction (DLE) technologies. Commercial lithium production is likely to commence by 2027.
This JV is expected to extend Aramco's capabilities into an adjacent sector, leveraging its technological innovation resource and data management skills. It would seek to unlock the potential of the Kingdom's high-value mineral resources, with the aim of helping meet the growing demand for lithium and other transition minerals both domestically and globally. The JV is expected to harness natural resources utilizing a wealth of subsurface data and emerging technologies to advance the Kingdom's economic diversification and energy ambitions, according to SPA.
The statements also added that there is significant potential for the extraction of energy transition minerals in the Kingdom. For example, Aramco has identified several areas with a high lithium concentration of up to 400 parts per million as part of its operations. The JV will benefit from Aramco's expertise and operations, including the use of existing infrastructure, industry-leading drilling operations, and more than 90 years of geological data in its area of operations.
Aramco Upstream President Nasir K. Al-Naimi said, "This announcement reflects Aramco's focus on positively contributing to the global energy transition. The proposed JV will enable the extraction of energy transition minerals, contributing to the growth of more sustainable energy solutions while diversifying our portfolio for a lower-carbon future. We expect that this partnership will leverage the world's leading upstream enterprise to apply significant low-cost advantages, industry experience, technological innovation, accumulated subsurface knowledge and an integrated supply chain ecosystem, with a view to meeting the Kingdom and potentially the world's projected lithium demand."
Ma'aden Senior Vice President of Exploration Darryl Clark stated, "Ma'aden has been undertaking one of the world's largest single-jurisdiction exploration programs across the Arabian Shield to unearth the estimated $2.5 trillion mineral endowment. This proposed JV would enable us to accelerate exploration of the Arabian Platform, combining Aramco's knowledge of the area with Ma'aden's mining and exploration expertise."
Lithium is a fundamental component of the energy transition, essential for production in fast-growing sectors such as electric vehicles, energy storage, and renewables. The global demand for lithium has tripled over the past five years, and its compound annual growth rate is anticipated to exceed 15% annually through 2035. The JV could help meet the Kingdom's forecasted demand for lithium, which is expected to grow twenty-fold between 2024 and 2030, supporting an estimated 500,000 electric vehicle batteries and 110 GW of renewables.
The planned JV, which is subject to customary closing conditions including regulatory approvals, was announced during the Future Minerals Forum in Riyadh.