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Oil Climbs on Middle East Escalation Fears, US Fed Rate Cut 

A chemical/oil tanker (L) passes a container ship at the Port of Los Angeles on September 20, 2024 in Los Angeles, California. (Getty Images North America / AFP)
A chemical/oil tanker (L) passes a container ship at the Port of Los Angeles on September 20, 2024 in Los Angeles, California. (Getty Images North America / AFP)
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Oil Climbs on Middle East Escalation Fears, US Fed Rate Cut 

A chemical/oil tanker (L) passes a container ship at the Port of Los Angeles on September 20, 2024 in Los Angeles, California. (Getty Images North America / AFP)
A chemical/oil tanker (L) passes a container ship at the Port of Los Angeles on September 20, 2024 in Los Angeles, California. (Getty Images North America / AFP)

Oil prices rose on Monday, buoyed by concerns that heightened conflict in the Middle East may curtail regional supply and expectations last week's outsized US interest rate cut will support demand.

Brent crude futures for November were up 22 cents, or 0.3% at $74.71 a barrel at 0705 GMT. US crude futures for November were up 26 cents, or 0.4%, at $71.26.

Both contracts rose in the previous session on support from the US interest rate cut and a dip in US supply in the aftermath of Hurricane Francine. Oil prices climbed last week for a second week.

A softer economic outlook from top consumers China and the US capped further gains.

"Geopolitical tensions in the Middle East have edged up a notch between Israel and Hezbollah, which could leave oil prices well-supported on the risks of a wider regional conflict," said Yeap Jun Rong, market strategist at IG.

"However, price gains have been somewhat more measured, which may reflect some reservations over the actual impact on oil supplies, given that the Middle East conflict has been dragging for some time now with little disruptions so far."

The Israeli military launched its most widespread wave of air strikes against Iran-backed Hezbollah, simultaneously targeting Lebanon's south, eastern Bekaa valley and northern region near Syria in nearly a year of conflict.

The latest attacks came amid some of the heaviest cross-border exchanges of fire in a conflict raging alongside the war between Israel and Hamas in Gaza.

The conflict has escalated sharply in the past week after thousands of pagers and walkie-talkies used by Hezbollah members exploded. The attack was widely blamed on Israel, which has not confirmed or denied responsibility.

While both oil benchmarks rose more than 4% last week on the back of the US rate cut, weaker demand sentiment in top oil importer China is capping the upswing, said Priyanka Sachdeva, senior market analyst at Phillip Nova, in a note.

"The demand for fuel is still up in the air," she said, adding that the US rate cut "raised concerns that the Fed may have envisioned ailing labor markets".

Last Wednesday, the US Federal Reserve cut interest rates by half a percentage point, a larger decrease in borrowing costs than many expected.

Interest rate cuts typically boost economic activity and energy demand, but analysts and market participants are concerned the central bank may see a slowing job 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.