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KAPSARC Study Analyzes Regional Electricity Demand After Energy Price Reform

Energy price reform contributes to reducing electricity consumption in Saudi Arabia (Asharq Al-Awsat)
Energy price reform contributes to reducing electricity consumption in Saudi Arabia (Asharq Al-Awsat)
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KAPSARC Study Analyzes Regional Electricity Demand After Energy Price Reform

Energy price reform contributes to reducing electricity consumption in Saudi Arabia (Asharq Al-Awsat)
Energy price reform contributes to reducing electricity consumption in Saudi Arabia (Asharq Al-Awsat)

King Abdullah Petroleum Studies and Research Center (KAPSARC) has published the first study of its kind that analyzes regional electricity demand in the Saudi Arabia after energy price reforms.

The paper, prepared by the center’s researchers Jeyhun Mikayilov, Abdulelah Darandary, Ryan al-Yamani, Fakhri Hasanov and Hatem al-Atawi showed that residential electricity demand is determined by a variety of drivers, which vary from one area to another.

These drivers include, among other things, market concentration, regional wealth, population and income.

According to the study, dubbed “Regional Heterogeneous Drivers of Electricity Demand in Saudi Arabia: Modeling Regional Residential Electricity Demand,” a better understanding of regional electricity demand and its drivers may allow for tailored price reform and regional household assistance programs.

This is in addition to better anticipating demand responses and estimating the revenues they would get from future price reforms more accurately.

The impact of the 2018 price reforms led to a decline in the total residential electricity consumption of 9.1% nationwide, it noted.

Meanwhile, the central region ranks as the most affected region in the reduction of residential electricity consumption, which decreased to 10.7 percent followed by the eastern region with 8.8 percent, then the western and southern regions with 8.1 percent.

Researchers found that the price, income, weather, and population were considered the drivers of residential electricity consumption in each region.

The short-run impacts of price changes on demand were found to be significant for all regions, at around 0.1 percent, except for the eastern region, for which they were insignificant.

Notably, the eastern region has specific features. It has the highest income compared with the other regions.

The paper recommended utilization of smart meters and deploying strategies to promote the use of efficient appliances, as these meters offer consumers the ability to adjust their habits by monitoring their energy use and supplying them with the data.

Suppliers can also use smart meters to allow consumers to compare their energy use with that of other consumers.

In addition, the research suggests planning optimal housing types considering region-specific features, increasing the insulation capacities of the existing houses/buildings, setting centralized AC's in apartments. The population densities should also be considered in future city expansion plans to ensure sustainable energy consumption.

The study comes under the KAPSARC Global Energy Macroeconometric Model (KGEMM), aiming to analyze the effects of different policy choices, such as energy price and fiscal policy changes, on the economy, assess the effects of the Saudi Vision 2030 initiatives and its targets and link Saudi Arabia’s macroeconomic-energy environment with the global economy/energy markets.

In February 2020, KAPSARC announced making progress in the list of the best research centers regionally and globally, as it jumped 14 ranks in the Middle East and North Africa (MENA) research centers.

It was ranked 15th out of 103 research centers regionally, and 13th out of 60 research centers globally specializing in energy policy.

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Business

GASTAT: Saudi Consumer Inflation Eased to 1.7% in February

Shoppers are seen at a supermarket in Saudi Arabia. SPA
Shoppers are seen at a supermarket in Saudi Arabia. SPA
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GASTAT: Saudi Consumer Inflation Eased to 1.7% in February

Shoppers are seen at a supermarket in Saudi Arabia. SPA
Shoppers are seen at a supermarket in Saudi Arabia. SPA

Saudi Arabia’s annual inflation rate edged down to 1.7 percent in February, the lowest level since January 2025, according to data from the General Authority for Statistics (GASTAT).

The consumer price index eased from 1.8 percent in January to 1.7 percent, GASTAT said Sunday.

The data further showed that housing, water, electricity, gas, and other fuels rose 4.1 percent in February 2026, mainly driven by a 5.1 percent increase in actual housing rents.

Transport prices also climbed 1.4 percent, supported by a 5.6 percent rise in passenger transport services, while restaurant and accommodation services increased 1.9 percent due to higher accommodation costs.

Personal care, social protection and miscellaneous goods and services surged 8.2 percent, largely reflecting a jump in other personal effects, particularly jewelry and watch prices, which rose 29 percent.

According to GASTAT, prices in recreation, sport and culture climbed 1.8 percent, while education services increased 1.4 percent. As for information and communications prices, they edged up 1.1 percent.

Data showed that prices in the insurance and financial services category rose 1 percent.

As for furnishings, household equipment and routine maintenance, prices declined 0.9 percent, while prices for food and beverages, as well as clothing and footwear, remained largely stable during the period.

GASTAT said that on a monthly basis, the Consumer Price Index last month recorded relative stability compared to January 2026.

Business

Oil Hovers around $100, Stocks Mixed as Iran War Rages

An oil pump is pictured at an obsolete oilfield, with wind turbines in the background, in Sargentes de la Lora on March 13, 2026, near Burgos in northern Spain, where oil first flowed in Spain in 1964. (Photo by CESAR MANSO / AFP)
An oil pump is pictured at an obsolete oilfield, with wind turbines in the background, in Sargentes de la Lora on March 13, 2026, near Burgos in northern Spain, where oil first flowed in Spain in 1964. (Photo by CESAR MANSO / AFP)
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Oil Hovers around $100, Stocks Mixed as Iran War Rages

An oil pump is pictured at an obsolete oilfield, with wind turbines in the background, in Sargentes de la Lora on March 13, 2026, near Burgos in northern Spain, where oil first flowed in Spain in 1964. (Photo by CESAR MANSO / AFP)
An oil pump is pictured at an obsolete oilfield, with wind turbines in the background, in Sargentes de la Lora on March 13, 2026, near Burgos in northern Spain, where oil first flowed in Spain in 1964. (Photo by CESAR MANSO / AFP)

Oil prices hovered around $100 a barrel Monday and stocks fluctuated as the Iran war moved into a third week with both sides showing no sign of backing down and diplomats trying to ensure safe passage for tankers through the crucial Strait of Hormuz.

Crude shot up in the opening minutes after the US president said at the weekend that forces struck military targets on Kharg Island, a scrubby stretch of land in the Gulf that handles almost all of Iran's oil exports.

He also warned attacks could expand to energy infrastructure if the Iranian republic interferes with transit through Hormuz, which has been effectively closed since the US-Israel operations began on February 28.

Iran's Fars news agency reported soon after that no oil infrastructure was damaged in strikes.

Trump urged other countries to send warships to keep the waterway open but offered no specifics or commitments from the US side, saying he hoped China, France, Japan, South Korea and the UK would take part.

He later wrote Saturday in a Truth Social post: "The Countries of the World that receive Oil through the Hormuz Strait must take care of that passage, and we will help -- A LOT!

"This should have always been a team effort, and now it will be."

However, Japan said Monday it was "not at the moment considering issuing a maritime security operation", while Australia announced it would not send any navy ships to the region.

Trump said Tehran wanted a deal to end the fighting, but that he was not prepared to make one on current terms, without giving further details.

Iran's Foreign Minister Abbas Araghchi said his country was not interested in talks with Washington.

"We don't see any reason why we should talk with Americans, because we were talking with them when they decided to attack us," he told CBS's "Face The Nation" in an interview aired Sunday.

"There is no good experience talking with Americans," adding that "we never asked for a ceasefire, and we have never asked even for negotiation".

However, he did say he was ready to speak to countries "who want to talk to us about the safe passage of their vessels".

"I cannot mention any country in particular, but we have been approached by a number of countries" seeking such safe passage, he added.

Meanwhile, traders hoping for an early end to the conflict were left disappointed after Trump's top economics adviser Kevin Hassett said the Pentagon estimates it could take up to six weeks, though the operation was ahead of schedule.

Both main crude contracts advanced. Brent shot up around three percent to as high as $106.50 before paring the gains, while West Texas Intermediate sat around $99.

And with worries growing about a possible energy crisis that could hammer the global economy, equity markets remained under pressure.

Tokyo, Shanghai, Sydney, Seoul, Wellington, Manila and Jakarta were all down, though Hong Kong, Singapore and Taipei edged up.

"Equities may welcome any sign that Hormuz could be reopened, but with further strikes still being threatened and diplomacy still patchy, conviction is low," said Charu Chanana at Saxo Markets.

Adding to economic concerns was data showing Friday that fourth-quarter US gross domestic product expanded 0.7 percent, much slower than the initial reading of 1.4 percent.

And delayed figures showed the Federal Reserve's preferred inflation gauge dipped to 2.8 percent in January before energy prices shot higher.

"Developments over the weekend, while no more disconcerting than at the end of last week, don't offer any obvious pretext for a less pessimistic start to the new trading week," warned National Australia Bank's Ray Attrill.

Also in view this week are policy meetings at seven major central banks including the Fed, Bank of England and the European Central Bank.

While they are expected to stand pat on interest rates, any remarks on the impact of the war on their respective economies will be closely followed.

Business

Bahrain Starts to Cut Production at World’s Largest Aluminium Smelter

A worker walks past the storage of aluminium ingots at the aluminum smelter Aluminium Dunkerque in Loon-Plage near Dunkirk, France, September 22, 2022. REUTERS/Pascal Rossignol
A worker walks past the storage of aluminium ingots at the aluminum smelter Aluminium Dunkerque in Loon-Plage near Dunkirk, France, September 22, 2022. REUTERS/Pascal Rossignol
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Bahrain Starts to Cut Production at World’s Largest Aluminium Smelter

A worker walks past the storage of aluminium ingots at the aluminum smelter Aluminium Dunkerque in Loon-Plage near Dunkirk, France, September 22, 2022. REUTERS/Pascal Rossignol
A worker walks past the storage of aluminium ingots at the aluminum smelter Aluminium Dunkerque in Loon-Plage near Dunkirk, France, September 22, 2022. REUTERS/Pascal Rossignol

Aluminium Bahrain, known as Alba, said on Sunday it had initiated a shutdown of three aluminium smelting lines accounting for 19% of its capacity to preserve business continuity amid ongoing disruption in the Strait of Hormuz.

The closures are the latest impact on the Middle East aluminium sector, which accounts for around 9% ⁠of global supply, from the US-Israeli war on Iran, according to Reuters.

Fears of shortages propelled London Metal Exchange aluminium to a nearly four-year high of $3,546.50 per metric ton on Thursday.

Alba, which has smelting capacity of 1.62 million tons of aluminium per year, said in a statement it had initiated a “controlled and safe shutdown” of reduction lines 1, 2 and 3.

“This targeted, line-specific action is designed to optimize the utilization of Alba's existing raw materials inventory and prioritize operational stability across Reduction Lines 4, 5 and 6,” added ⁠Alba, which describes itself as the “world's largest aluminium smelter on one site.”

The company had issued force majeure on March 4 since it was unable to ship metal to customers due to the effective closure of the Strait of Hormuz.

The closure has also left Middle East ⁠smelters unable to bring in vessels carrying their key raw material, alumina.

Energy supply is another issue for smelters.

Qatar's Qatalum had begun a shutdown on March 3 due to a suspension of its ⁠gas supply but will now operate at 60% capacity.

Alba, meanwhile, said it would use the opportunity to undertake asset care and maintenance on the three shuttered lines, including ⁠comprehensive housekeeping and cleaning activities, laying the foundations for a safe restart when conditions improve.

“The company is also working closely with suppliers and customers to manage commitments and mitigate disruption,” it added.