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
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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.



IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.


Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.


Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.