Oil Price Seen Holding Steady on Middle East Tension, Global Downturn

The OPEC logo is seen outside their headquarters in Vienna, Austria. Photo: Reuters
The OPEC logo is seen outside their headquarters in Vienna, Austria. Photo: Reuters
TT

Oil Price Seen Holding Steady on Middle East Tension, Global Downturn

The OPEC logo is seen outside their headquarters in Vienna, Austria. Photo: Reuters
The OPEC logo is seen outside their headquarters in Vienna, Austria. Photo: Reuters

Oil prices are likely to remain steady this year as supply shocks from Saudi Arabia fail to lift prices in a market grappling with flagging demand, a Reuters survey showed on Monday, as warnings of a global economic deceleration mount.

The survey of 53 economists and analysts forecast Brent crude would average $65.19 a barrel in 2019, little changed from $65.02 forecast last month. This was however, slightly higher than the $64.76 average for the global benchmark so far this year.

West Texas Intermediate crude futures were seen averaging $57.96 per barrel against last month's $57.90 forecast. WTI prices have averaged $57.11 so far this year.

Carsten Fritsch, senior commodity analyst at Commerzbank, said: "The oil market is facing challenging times. Recent attacks on oil facilities in Saudi Arabia have painfully demonstrated the risks to oil supply, which is why short-term price spikes are possible at any time."

"The oil market fundamentals, on the other hand, are deteriorating. Demand growth is weakening, oil supply outside OPEC is rising significantly and the production of OPEC and its allies has recently faded. We therefore do not consider the recent price surge to be sustainable."

Brent prices posted their biggest one-day price jump in 30 years after an attack on Saudi Aramco facilities earlier this month, which halved crude oil supply from the world's top oil exporter.

The attack led to fogginess in the market and heightened the tensions in an already troubled region by the ongoing conflicts between Saudi Arabia's ally, the United States and Iran. However, the Kingdom has recovered its oil production faster than it was expected.

For his part, Cailin Birch, an analyst at the Economist Intelligence Unit, said: "Ultimately, the impact of the drone strikes on oil prices will depend on two main factors: how long it takes for Saudi to bring these facilities back on stream, and whether or not further direct strikes are carried out."

Despite the attacks, most analysts said the Organization of the Petroleum Exporting Countries could extend the output cuts until the end of next year, and sanctions on Iran and Venezuela were unlikely to ease soon.

While there is enough spare capacity to compensate for the lost production, analysts said the festering US-China trade dispute, along with robust output from non-OPEC countries, will keep oil prices in check over the long term.

Analysts expect growth in global oil demand to range between 0.9-1.3 million bpd in 2019 and 0.8-1.5 million bpd next year.

The US Energy Information Administration cut its 2019 world oil demand growth forecast for an eighth straight month in September to 0.89 million barrels per day.

On the supply side, non-OPEC production would continue to rise, poll respondents said, with United States dominating the global supply growth with modest increases from Brazil, Norway and Mexico.

Edward Moya, a senior market analyst at OANDA, said: "If Trump remains the frontrunner, expectations for US production to rise to fresh record highs will continue with 2020 possibly topping 13.5 million bpd. Trump's pro-energy policies will remain very supportive for US becoming the world's top oil exporter."

Under an agreement between OPEC members and non-OPEC producers, Russia agreed to cut production by 228,000 barrels per day from its level in October 2018.

On Monday, Reuters cited two sources saying Russia's output declined to 11.24 million bpd in Sept. 1-29, down from 11.29 million bpd in the previous month.

Under an agreement between OPEC members and non-OPEC producers, Russia agreed to cut production by 228,000 barrels per day from its level in October 2018.

According to Reuters, Russia should cut its output by 11.7 and 11.8 barrels per day. The Russian Energy Ministry declined to comment.

After the attack on the Saudi oil facilities, the Russian oil production was relatively high.



Saudi Gold Refinery Obtains 10 Gold Exploration Licenses in Tanzania

A gold mine in Saudi Arabia (SPA) 
A gold mine in Saudi Arabia (SPA) 
TT

Saudi Gold Refinery Obtains 10 Gold Exploration Licenses in Tanzania

A gold mine in Saudi Arabia (SPA) 
A gold mine in Saudi Arabia (SPA) 

Saudi Gold Refinery Company (SGR) announced Sunday it has secured 10 licenses to explore gold in the Republic of Tanzania, covering a total area of nearly 1,000 square kilometers, in a move aimed at expanding the company’s mining operations outside the Kingdom.

The company said it has allocated an initial investment of $10 million to carry out exploration activities, within an ambitious plan to gradually increase total investments to $100 million. These investments will support the development, establishment, and operation of gold mines, with commercial production targeted to commence by 2030.

The announcement follows a visit to Tanzania by Faisal Suliman Al-Othaim, Deputy Chairman of the Board of Directors at SGR.

According to the company, this milestone is supported by the Ministry of Investment and the Saudi Embassy in Tanzania, highlighting the importance of strengthening Saudi investments abroad and creating new opportunities for national companies in the global mining industry.

SGR continues to advance its global expansion strategy through its international investment arm, UGM Tanzania co, which oversees its operations and investment activities in Tanzania and Ethiopia.

The company also maintains ongoing projects and business activities in Egypt and the Sultanate of Oman, while actively exploring opportunities in additional markets to further expand its global footprint and create sustainable value across the mining sector.

In the Saudi market, the company plans to develop six to ten mines before 2030, at an average rate of two mines per year. These plans are supported by the Ministry of Industry and Mineral Resources, the Saudi Industrial Development Fund, financial institutions and other relevant authorities and stakeholders.

 

 

 


Oil Falls as Trump Says New Iran Attacks ‘Unlikely’

A worker walks past oil pipes at a refinery in Wuhan, Hubei province March 23, 2012. (Reuters)
A worker walks past oil pipes at a refinery in Wuhan, Hubei province March 23, 2012. (Reuters)
TT

Oil Falls as Trump Says New Iran Attacks ‘Unlikely’

A worker walks past oil pipes at a refinery in Wuhan, Hubei province March 23, 2012. (Reuters)
A worker walks past oil pipes at a refinery in Wuhan, Hubei province March 23, 2012. (Reuters)

Oil prices fell at Monday's open after US President Donald Trump said he was highly unlikely to order new Iran attacks while talks to end the conflict make progress, despite both nations' reports of attacks on ships in or near the Strait of Hormuz.

Brent was down 84 cents, or 0.85%, to $97.48 a barrel by 0138 GMT, while West Texas Intermediate fell 32 cents, or 0.35%, to $90.51 a barrel.

The fall reversed minor gains made on Friday’s settlement as the market assessed the possibility of further US ‌strikes on Iran, ‌although Brent fell 17% last week, the ‌steepest ⁠weekly drop since the ⁠start of the COVID pandemic and the biggest in absolute terms, according to LSEG data dating back to 1988.

"It depends on whether or not they sign a very strong agreement," Trump told CNN in a phone interview. "The answer is, highly unlikely it's going to be necessary."

Trump had hinted at renewing attacks on Iran after ⁠last week's US midterm elections, but there has ‌been no sign of a large-scale ‌US military operation. Iran has said it would respond by striking US and ‌Israeli targets.

Tim Waterer, chief analyst at KCM Trade, called ‌Trump's comments "more measured" but said "the market is still waiting to see whether the midterms have produced a lasting shift in Trump’s approach to the conflict, or whether this is just another temporary change in tone."

Oil is headed ‌for a glut again as recovering Middle Eastern oil flows, rising production from other countries and ⁠weak demand have ⁠pushed global supply above consumption, JPMorgan said in a report on Friday, estimating a surplus of 1.1 million barrels per day in September, widening to 1.4 million bpd in October.

On Sunday, Iraq reached an understanding with the US to allow Iraqi oil exports through the Strait of Hormuz via a shipping lane near Oman, Foreign Minister Fuad Hussein said in an interview with Al Jazeera.

He said Iraq's losses from the Iran war and disruptions to oil exports had reached $60 billion.


Bahraini Transport Minister to Asharq Al-Awsat: Each Country to Finance Its Share of Gulf Railway Project

A conceptual rendering of the Gulf railway interconnection project. (X)
A conceptual rendering of the Gulf railway interconnection project. (X)
TT

Bahraini Transport Minister to Asharq Al-Awsat: Each Country to Finance Its Share of Gulf Railway Project

A conceptual rendering of the Gulf railway interconnection project. (X)
A conceptual rendering of the Gulf railway interconnection project. (X)

The Gulf Cooperation Council (GCC) member states took a new step toward completing the railway interconnection project by signing the project's general agreement in Bahrain on Sunday. This comes as part of efforts to establish an integrated transport network linking the six nations and boosting the movement of passengers, goods, and commercial trade among them.

Bahraini Minister of Transportation and Telecommunications Dr. Sheikh Abdulla bin Ahmed Al Khalifa told Asharq Al-Awsat that each country will fund and execute the portion of the project located within its territory.

Meanwhile, the costs, fees, and expenses associated with the shared interconnection components among member states will be determined collectively, he added.

He explained that the agreement establishes a joint framework for the project's execution and operation, while defining the obligations of member states and their coordination mechanisms.

He noted that the network, which extends some 2,117 kilometers, aims to transport 6 million passengers and 200 million tons of freight by 2030, with the figures projected to rise to more than 8 million passengers and 271 million tons of freight by 2045.

The project spans from Kuwait, passing through Saudi Arabia, Bahrain, Qatar, and the UAE, all the way to Oman, with the goal of achieving full network operations by December 2030.

According to the minister, interconnection lines between adjacent countries can become operational as soon as their components are completed, without the need to wait for the entire Gulf network to be finalized.

National financing and potential partnerships

On private sector participation, Al Khalifa said that it remains one of the viable options for financing, executing, or operating certain components of the project, depending on the outcomes of economic and financial studies. He stressed that there is no unified public-private partnership model approved across the entire network.

There are currently no pre-existing agreements with specific international partners to finance or execute the project, he said. However, the expertise of global companies in the fields of design, engineering, technology, and operating systems could be utilized based on the project's needs and its various phases.

Bahraini Minister of Transportation and Telecommunications Dr. Sheikh Abdulla bin Ahmed Al Khalifa.

Concerning the project's announced completion rate, the minister explained that the 50 percent figure represents the average progress achieved across member states, and does not mean that half of the construction work for the entire Gulf network has been completed.

The project's cost estimates are currently undergoing review and updates in light of economic shifts, rising prices for materials and services, construction costs, and inflation, he revealed without specifying an updated total cost at the present time.

Returns beyond passenger and freight transport

Al Khalifa said that the economic impact of the project is not limited to facilitating passenger movement and freight transport, but extends to improving supply chain efficiency, boosting trade among GCC countries, and linking industrial centers, economic zones, and logistical hubs, as well as supporting employment and investment opportunities.

He added that determining the project's exact contribution to the gross domestic product (GDP) or estimating expected savings in time and costs remains premature, given that returns vary depending on transport routes, the nature of the cargo, and the points of origin and destination.

In light of the challenges facing maritime navigation in the region, the minister stressed that the Gulf railway network is not intended to serve as a substitute for maritime transport. Instead, it acts as a complementary route that boosts transport options and connectivity among GCC nations, increasing the resilience of supply chains against disruptions that could affect various modes of transportation.

He noted that integration between ports, roads, railways, and airports will strengthen the flexibility of the Gulf transport system, while connecting to broader international logistical corridors remains a future possibility contingent on completing studies, understandings, and coordination with the relevant countries and entities.

King Hamad Bridge to link Bahrain and Saudi Arabia

Regarding the connection between Bahrain and Saudi Arabia, Al Khalifa explained that the King Hamad Bridge project includes road lanes and railway lines, enabling the international passenger station in Bahrain to connect with the Saudi railway network and forming one of the essential components for completing the Gulf interconnection.

He added that work is underway on the privatization procedures for the King Fahd Causeway Authority, alongside completing the necessary studies and procedures to transition to the execution of the new bridge project.

Achieving the connection between Bahrain and Saudi Arabia is a fundamental requirement for operating the railway line between the two countries within the project's targeted timeframe in December 2030,e he said.