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Oil Prices Rise on US Inventories Drawdown Expectations, CPI Focus

Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. (Reuters)
Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. (Reuters)
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Oil Prices Rise on US Inventories Drawdown Expectations, CPI Focus

Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. (Reuters)
Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. (Reuters)

Oil prices rose on Wednesday on expectations for higher demand as the US dollar weakened and a report showed US crude and gasoline inventories fell while the release of inflation data may point to a more supportive economic outlook.
Brent crude futures were up 51 cents, or 0.6%, at $82.89 a barrel at 0630 GMT. US West Texas Intermediate crude futures (WTI) rose 55 cents, or 0.7%, to $78.57 a barrel.
US crude oil inventories fell 3.104 million barrels in the week ended May 10, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline inventories fell by 1.269 million barrels and distillates rose by 673,000 barrels, Reuters said.
US government inventory data is due later on Wednesday and are likely to also show a drop in crude stockpiles as refineries increase their runs to meet increased fuel demand heading into the peak summer driving season.
"Expectations of another drawdown in US oil inventories should support oil prices," ANZ Research said in a note.
US consumer price index (CPI) data is also due on Wednesday and should give a clearer indication whether the Federal Reserve may cut interest rates later this year, which could spur the economy and boost fuel demand.
Oil prices also found support from a softer US dollar and stimulus measures from China, said independent market analyst Tina Teng, with a weaker greenback making dollar-denominated oil cheaper for investors holding other currencies.
Teng was referring to China's plans to raise 1 trillion yuan ($138.39 billion) in long-term special treasury bonds this week to raise funds to stimulate key sectors of its flagging economy, which is the world's largest oil importer.
"The US CPI and China's economic data are key to driving oil prices for the rest of the week," she added. China will release economic activity data on Friday.
Prices were also supported by concerns around Canadian oil supply, a key exporter to the US.
A large wildfire is approaching Fort McMurray, the hub for Canada's oil sands industry that produces 3.3 million barrels per day of crude, or two-thirds of the country's total output.

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Saudi Arabia Implements Real Estate Regulations to Stabilize Riyadh’s Market

The Saudi capital, Riyadh (SPA)
The Saudi capital, Riyadh (SPA)
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Saudi Arabia Implements Real Estate Regulations to Stabilize Riyadh’s Market

The Saudi capital, Riyadh (SPA)
The Saudi capital, Riyadh (SPA)

Amid rapid growth in Saudi Arabia’s real estate sector, fueled by the country’s economic diversification strategy, Crown Prince Mohammed bin Salman has introduced a series of regulatory measures in Riyadh. These steps aim to balance the capital’s real estate market, demonstrating the leadership’s commitment to providing sustainable and effective solutions for challenges in this vital sector.

Experts told Asharq Al-Awsat that rising property prices remain one of the biggest challenges in the real estate market. According to the General Authority for Statistics (GASTAT), the Real Estate Price Index increased by 3.6% in Q4 2024—the highest quarterly growth in six quarters—mainly driven by the residential sector, which accounts for 72.7% of the index.

Several factors are contributing to rising prices, including high demand for housing in major cities, large-scale development projects attracting investment, and improvements in infrastructure that increase property values.

Following an in-depth study by the Royal Commission for Riyadh City and the Council of Economic and Development Affairs, the Crown Prince’s directives focus on increasing housing supply and regulating market fluctuations to ensure fairness and stability.

Key Real Estate Measures

The newly announced policies include lifting restrictions on real estate transactions and development in several areas of Riyadh, covering 81.48 square kilometers. To meet housing demand, authorities plan to allocate between 10,000 and 40,000 residential plots annually over the next five years, with a price cap of SAR1,500 per square meter. Priority will be given to married citizens and individuals over 25 who do not own property, with applications processed through a new digital platform developed by the Royal Commission for Riyadh City.

To prevent speculative trading, new regulations restrict the sale, leasing, or mortgaging of land for ten years, except for construction financing. If a project is not completed within this period, the land will be reclaimed at its original purchase price.

Minister of Municipal, Rural Affairs, and Housing Majid Al-Hogail emphasized that these measures will help balance supply and demand while also revising the White Land Tax program to encourage property development. He also confirmed a comprehensive review of rental regulations, with amendments expected within 90 days.

Strong Demand for Real Estate

A report by JLL, a global real estate services firm, highlighted that despite a slowdown in construction projects across the Middle East and Africa in 2024, Saudi Arabia remained a strong performer. The Kingdom accounted for SAR29.5 billion in construction contracts, with significant activity in the hospitality, mixed-use, and entertainment sectors. The residential sector also performed well, with SAR7.9 billion in awarded contracts.

As Saudi Arabia prepares to host major global events, it may face challenges related to capacity and rising costs between 2025 and 2028. However, the government is addressing these issues by localizing industries, expanding infrastructure investments, accelerating digital transformation, and implementing regulatory reforms, with a focus on renewable energy and sustainability.

JLL’s Head of Projects and Development Services in Saudi Arabia, Maroun Dib, noted that strategic projects under Vision 2030 will continue attracting massive investments, creating expansion opportunities in the real estate sector. He added that major events like the FIFA World Cup and Expo will drive significant capital inflows, strengthening infrastructure development and setting the real estate sector on a solid growth trajectory beyond 2025.

Speaking to Asharq Al-Awsat, Khaled Al-Mobayed, CEO of Manassat Real Estate, stressed the importance of increasing housing supply to meet growing demand. He warned that failing to do so could lead to rising rental prices. Al-Mobayed suggested that expanding real estate development into smaller cities near major urban centers could ease pressure on large cities while providing affordable housing options.

Riyadh’s hospitality sector is experiencing rapid growth, driven by business tourism and international events. Average hotel room rates rose by 13.3% in 2024 to SAR239 per night, with 2,312 new hotel rooms expected in 2025. In Jeddah, religious and leisure tourism remains strong, supporting long-term growth despite minor market fluctuations.

Meanwhile, the retail sector in Riyadh is shifting toward experiential shopping, as consumers seek entertainment-driven retail experiences. Traditional shopping malls—especially enclosed malls—are facing declining occupancy rates. While large malls saw a 1.8% increase in lease rates in Q4 2024, community malls experienced stronger growth at 5.5%, whereas regional malls declined by 9.3%. A similar trend is visible in Jeddah, highlighting the need for more diverse and interactive retail spaces.

Industrial and Logistics Sectors on the Rise

Rising rental rates in the industrial and logistics sectors in Riyadh and Jeddah indicate strong market demand, fueled by economic diversification and the growth of e-commerce.

Additionally, the data center sector is rapidly expanding, driven by 5G technology and artificial intelligence. Riyadh, Dammam, and Jeddah now rank third in the Middle East and Africa for operational co-location data centers, contributing 12.6% of the region’s total IT capacity (1,050 megawatts) by the end of 2024. This positions Saudi Arabia for further digital infrastructure expansion.