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Saudi Aramco Says Reorganizing Downstream Business

Aramco says it will be reorganizing its downstream business. Asharq Al-Awsat
Aramco says it will be reorganizing its downstream business. Asharq Al-Awsat
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Saudi Aramco Says Reorganizing Downstream Business

Aramco says it will be reorganizing its downstream business. Asharq Al-Awsat
Aramco says it will be reorganizing its downstream business. Asharq Al-Awsat

Saudi Aramco said on Tuesday that it will be reorganizing its downstream business to support its global growth strategy, aiming to complete it by the end of this year.

The downstream model will be divided into four units: fuels including refining, trading, retail and lubes; chemicals; power; and pipelines, distribution and terminals, Aramco said in a statement.

"This reorganization is designed to enhance the effectiveness and efficiency of Aramco's existing downstream assets, but does not represent a fundamental change in the overall business structure," Aramco said.

Saudi Aramco CEO Eng. Amin al-Nasser said on Monday that oil demand was headed towards recovery, admitting that the oil industry faced one of the most difficult challenges in its history, with global demand in the first part of the second quarter reduced to about 25 million barrels.

On the impact of the coronavirus pandemic on business sectors, he said: “Many sectors have been affected, and countries and companies have deliberately postponed or suspended some projects and delayed final decisions regarding some investments and financing.”

But he added: “We are optimistic that the worst of the pandemic is behind us.”

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Oil Prices Stable on Monday as Data Offsets Surplus Concerns

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
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Oil Prices Stable on Monday as Data Offsets Surplus Concerns

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil prices stabilized on Monday after losses last week as lower-than-expected US inflation data offset investors' concerns about a supply surplus next year.

Brent crude futures were down by 38 cents, or 0.52%, to $72.56 a barrel by 1300 GMT. US West Texas Intermediate crude futures were down 34 cents, or 0.49%, to $69.12 per barrel.

Oil prices rose in early trading after data on Friday that showed cooling US inflation helped alleviate investors' concerns after the Federal Reserve interest rate cut last week, IG markets analyst Tony Sycamore said, Reuters reported.

"I think the US Senate passing legislation to end the brief shutdown over the weekend has helped," he added.

But gains were reversed by a stronger US dollar, UBS analyst Giovanni Staunovo told Reuters.

"With the US dollar changing from weaker to stronger, oil prices have given up earlier gains," he said.

The dollar was hovering around two-year highs on Monday morning, after hitting that milestone on Friday.

Brent futures fell by around 2.1% last week, while WTI futures lost 2.6%, on concerns about global economic growth and oil demand after the US central bank signalled caution over further easing of monetary policy. Research from Asia's top refiner Sinopec pointing to China's oil consumption peaking in 2027 also weighed on prices.

Macquarie analysts projected a growing supply surplus for next year, which will hold Brent prices to an average of $70.50 a barrel, down from this year's average of $79.64, they said in a December report.

Concerns about European supply eased on reports the Druzhba pipeline, which sends Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic and Germany, has restarted after halting on Thursday due to technical problems at a Russian pumping station.

US President-elect Donald Trump on Friday urged the European Union to increase US oil and gas imports or face tariffs on the bloc's exports.

Trump also threatened to reassert US control over the Panama Canal on Sunday, accusing Panama of charging excessive rates to use the Central American passage and drawing a sharp rebuke from Panamanian President Jose Raul Mulino.