How the coronavirus crisis forced the largest oil supply cut in history

A handout picture provided by Energy giant Saudi Aramco, Saudi Arabia's state-owned oil and gas company, shows its Dhahran oil plants, in eastern Saudi Arabia on February 11, 2018. (AFP/Aramco/File Photo)
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Updated 18 September 2020
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How the coronavirus crisis forced the largest oil supply cut in history

  • Pulitzer Prize-winning author Daniel Yergin’s book “The New Map” traces the dramatic events of March and April 
  • Markets went into free fall as the economic effects of the COVID-19 pandemic hit demand forecasts for crude

Early last spring, global oil markets were in free fall as the economic effects of the coronavirus pandemic hit demand forecasts for crude. Members of the OPEC+ alliance, led by Saudi Arabia and Russia, watched as prices more than halved in a few weeks, and wondered what to do. Pulitzer Prize winner Daniel Yergin, in the first of two exclusive excerpts from his new book “The New Map – Energy, Climate, and the Clash of Nations,” narrates the inside story of the month that shook the oil world.

It was this decline that precipitated, in the first week of March, a meeting of OPEC+ – OPEC and its non-OPEC partners, 23 countries in all – in Vienna to address what was turning into, by far, the biggest decline in consumption ever recorded.

While the countries coming to Vienna knew that the situation was bad, they did not know just how bad, nor how much worse it could get. By then, however, the common interest that the two leading countries of the group – Saudi Arabia and Russia – had forged over the last few years was unraveling.

The Russian budget was pegged at $42 a barrel, the Saudi budget at $65, and, according to the IMF (International Monetary Fund), Saudi Arabia needed $80 or more to balance its budget. Moreover, the Russians had seen the 2016 OPEC+ deal as temporary and expedient; the Saudis wanted to make it permanent and keep Russia in it.

The Saudi Energy Minister Prince Abdul Aziz bin Salman sought new cuts that would be deeper, and then insisted strongly on even deeper cuts. The Russian energy minister, Alexander Novak, just as strongly resisted. He wanted to extend the existing deal and not make any further cuts for a few weeks to see the impact as the coronavirus advanced.

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READ PART 2: Coronavirus crisis gives oil exporters a crash course in energy transition

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On the morning of March 6, Novak flew into Vienna from Moscow and went to the OPEC headquarters. There, in a small fifth-floor conference room, he met privately with Prince Abdul Aziz. There was no meeting of the minds. They descended stone-faced to the first floor for the crucial joint meeting of OPEC and non-OPEC ministers. It was an impasse. The meeting broke up with no agreement.

“We will all regret this day,” Prince Abdul Aziz said on the way out. Asked what Saudi Arabia would now do, he added: “We will keep you wondering.”

The OPEC countries “didn’t consider any other variants,” said Novak. And now, he added, since there was no agreement, all countries were free to produce whatever they wanted.

An effort at calming words was made by Suhail Al-Mazrouei, the UAE’s petroleum minister. “They need more time to think about it,” he said. But OPEC+ had blown up.

The failure in Vienna shocked the global oil market, with reverberations in financial markets. Saudi Arabia wasted no time in ending the “wondering” by announcing that it was going to go all out, increasing production from 9.7 million barrels per day (bpd) to 12.3 million bpd over the next month.

“Increasing production when demand is falling,” said Novak, trained as an economist, “is irrational from the economic theory point of view.” Russia had nowhere near that extra production capacity but said it would increase as much as it could.

The comity going back to 2016 was gone – in its place a price war and a battle for market share. The would-be partners had once again become fierce competitors. Some in Moscow, who had opposed a deal to restrain production, welcomed the breakdown.

“If you give up market, you will never get it back,” said Igor Sechin, the CEO of Rosneft and the biggest Russian critic of OPEC+ from the beginning. Those such as Sechin opposed to any deal had been particularly loath to give up market share to the US.




A picture taken on September 15, 2019 shows the entrance of an Aramco oil facility near al-Khurj area, just south of the Saudi capital Riyadh. (AFP/File Photo)

In the four years that Russia had been part of the agreement and its production constrained, US oil output had increased 60 percent, catapulting the US into the No. 1 position.

Beyond markets, they regarded US shale as a “strategic threat.” For they saw the abundance of shale oil and gas as an adjunct to US foreign policy, giving the US a free hand to impose sanctions on the Russian energy sector, as it had done only a few months earlier, in forcing a halt to the almost-completed Nord Stream 2 pipeline.

US shale, they expected, would inevitably be a major casualty of a price war, owing to its higher costs and the constant drilling it required, compared to Saudi and Russian conventional oil.

Yet what was not understood at the beginning of March was that this battle for market share was being launched into a market that was rapidly shrinking owing to the virus (COVID-19). The epidemic in China was turning into a global pandemic.

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Trump began doing what he had done his entire career: Working the phones, this time in a round-robin with King Salman, (Crown Prince Mohammed bin Salman) MBS, (Russian President) Vladimir Putin, and other leaders.

The dealmaker was now going for a mega-deal. Given what were described as the “irreconcilable differences” that had led to the breakup in Vienna between Saudi Arabia and Russia, it was also something like divorce mediation.

Over two weeks or so, Trump talked with Putin more than in the entire year previous. On April 1, Saudi production rose to 12 million bpd. Some of the phone calls were very direct. Mention was made of those 13 senators (from oil-producing states who had voiced their frustration over the oil price war).

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READ MORE: OPEC+ panel to meet amid oil price decline

Crunch meeting of oil alliance over cuts in output

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After one such call, Trump tweeted: “Just spoke to my friend MBS of Saudi Arabia, who spoke with President Putin of Russia and I expect and hope that they will be cutting back approximately 10 million barrels and maybe substantially more.” Shortly after, he raised the ante to 15 million.

Given the oil war and the animosity, his numbers were greeted with skepticism. But the wheels were grinding. Saudi Arabia called for an urgent meeting of producers, “in appreciation of the request of the president of the US, Donald Trump.”

On April 3, Putin told a video conference that Russia, as well as Saudi Arabia and the US, were “all interested in joint … well-coordinated actions for ensuring the long-term stability of the market.”

He said that the price collapse was caused by COVID-19. 

But how could a deal be made?

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On April 10, the energy ministers of the G20 assembled. “We must stabilize world energy markets,” said US Energy Secretary Dan Brouillette. “This is the time for all nations to seriously examine what each can do to correct the supply/demand imbalance.”

By then, everything was more or less in place for a grand bargain. Except one member of OPEC+ was holding out. Mexican President Lopez Obrador did not want anything to do with the deal. He had his own politics; he was committed to Pemex, the national oil company, increasing production, not cutting it – even if, in fact, its actual production was in decline.

More night-time phone calls ensued, and an understanding was worked out with Mexico. That was followed by the conference call with Trump, Putin, and King Salman that sealed the deal.




A general view shows the Saudi Aramco oil facility in Dammam city, 450 kms east of the Saudi capital Riyadh. (AFP/File Photo)

The total OPEC+ deal was for a 9.7 million bpd reduction; of which Russia and Saudi Arabia would each contribute 2.5 million barrels. Now they were on absolute parity – an agreed baseline of 11 million bpd each, which would go down for each to 8.5 million barrels.

The other 21 members of OPEC+ agreed to their own cutbacks. So did other major non-OPEC producers that were not part of OPEC+ – Brazil, Canada, and Norway. But these reductions would include declines driven by economics, and those were already occurring.

The deal itself was historic, both for the number of participants and the sheer complexity. It was the largest oil-supply cut in history. Nothing like this had ever happened before in the world of oil, and certainly not with the US at the center of it.

After the deal was done, Prince Abdul Aziz described the oil war as “an unwelcome departure” from Saudi policy. But he said: “We had to because of a desire to capture some revenues versus sitting on our hands and doing nothing.”

And the “mediation” from Washington had helped, for it had ended the rift with Russia, at least for the time being. “We don’t need divorce lawyers yet,” the prince said with some relief.

 

• Extracted from The New Map: Energy, Climate and the Clash of Nations by Daniel Yergin (Allen Lane). Copyright Daniel Yergin 2020.


Saudi Arabia launches global platform to shape future of tourism 

Updated 22 May 2025
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Saudi Arabia launches global platform to shape future of tourism 

RIYADH: Saudi Arabia has launched TOURISE, a global platform connecting leaders in tourism, tech, investment, and sustainability, as it positions itself to shape future travel policy and innovation. 

The platform, officially introduced by Minister of Tourism Ahmed Al-Khateeb, will serve as a year-round initiative to unlock investment opportunities, address sector-wide challenges, and develop policies to guide the next phase of global tourism growth.  

The launch aligns with Saudi Arabia’s broader push to become a global tourism hub, backed by major infrastructure investments, streamlined visas, and high-profile events. In 2024, Saudi Arabia hit its Vision 2030 target of 100 million visitors — seven years early — with tourism now contributing nearly 5 percent to gross domestic product. 

Speaking during the virtual launch, Al-Khateeb said: “Tourism is one of the most dynamic, connective forces in the world’s economy, supporting one in ten jobs globally. But as the world evolves, the sector must too.”  

He added: “Whether adapting to technological disruption and changing traveler expectations, to addressing the urgent calls for sustainability and a more equitable approach to travel, TOURISE will be the much-needed platform to shape the future of tourism.”  

TOURISE will be supported by an advisory board composed of global figures from the tourism, hospitality, and technology, as well as entertainment and investment sectors. 

According to the official press release, TOURISE will also form working groups focused on key themes and will publish white papers and global indices in collaboration with international organizations. 

The first TOURISE Summit will take place in Riyadh from Nov. 11-13. The event will explore four major areas: the role of artificial intelligence in tourism, investment and business model innovation, travel experience upgrades, and inclusive and sustainable tourism practices.  

An Innovation Zone will spotlight emerging technologies from both public and private sector firms. 

An accompanying awards program will recognize destinations and organizations that demonstrate leadership in categories such as sustainability, digital transformation, cultural preservation, inclusive tourism and workforce development.  

Nominations for the awards are scheduled to open on June 2, with winners to be announced on the summit's opening day. 

“For this industry to evolve and reach its full potential, public-private sector collaboration is critical to the continued success of Travel & Tourism worldwide,” said Julia Simpson, president and CEO of the World Travel & Tourism Council and a member of the TOURISE advisory board.  


Egypt central bank cuts key interest rates by 100 basis points, statement says

Updated 22 May 2025
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Egypt central bank cuts key interest rates by 100 basis points, statement says

CAIRO: Egypt’s central bank lowered its key interest rates by 100 basis points on Thursday, its second rate cut in 2025 after keeping rates unchanged for a year.


Closing Bell: Saudi main index ends lower at 11,188

Updated 22 May 2025
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Closing Bell: Saudi main index ends lower at 11,188

  • MSCI Tadawul 30 Index lost 12.2 points to close at 1,428.81
  • Parallel market Nomu declined by 156.89 points to end at 27,260.73

RIYADH: Saudi Arabia’s Tadawul All Share Index closed in the red on Thursday, falling 114.94 points, or 1.02 percent, to settle at 11,188.74.

The total trading turnover reached SR4.4 billion ($1.17 billion), with 76 stocks advancing and 165 declining.

The MSCI Tadawul 30 Index also dropped, losing 12.2 points, or 0.85 percent, to close at 1,428.81.

The Kingdom’s parallel market Nomu declined by 156.89 points, or 0.57 percent, to close at 27,260.73, with 29 stocks gaining and 49 retreating.

The best-performing stock of the day was Saudi Reinsurance Co., rising 3.70 percent to SR49.

Other top gainers included Al-Rajhi Company for Cooperative Insurance, whose share price rose 3.65 percent to SR119.2, and Umm Al-Qura Cement Co., which gained 3.42 percent to SR17.54.

The day’s largest decline was seen in SHL Finance Co., with its share price dipping 4.93 percent to SR19.30.

Al-Etihad Cooperative Insurance Co. saw its shares drop 3.86 percent to SR13.44, while Saudi Arabian Oil Co. declined 3.64 percent to SR25.15.

The best performer on the Kingdom’s parallel market was Enma AlRawabi Co., with its share price surging by 7.77 percent to reach SR24.98.

Lamasat Co.’s share price increased by 7.58 percent to reach SR7.1, and Natural Gas Distribution Co. reached SR47, increasing by 6.82 percent.

Albattal Factory for Chemical Industries Co. was the worst performer on the parallel market, declining 16.83 percent to reach SR42.


Aramco, stc drive Saudi brands’ value up 14% to $117bn, new report shows 

Updated 22 May 2025
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Aramco, stc drive Saudi brands’ value up 14% to $117bn, new report shows 

  • Energy, banking, and telecommunications represent nearly 74% of the total brand value in the rankings
  • Dairy producer Almarai is recognized as the Kingdom’s third strongest brand

RIYADH: Saudi Arabia’s top 100 brands reached a combined valuation of $116.8 billion as of January, up 14 percent year on year, led by energy giant Aramco and telecom operator stc, according to a new report.

Marketing consultancy firm Brand Finance said Aramco retained its position as the Kingdom’s most valuable brand for the sixth consecutive year, with a valuation of $41.7 billion.

The company’s strength stems from its global oil production capabilities and investments in low-carbon technologies. 

Aramco retained its position as the Kingdom’s most valuable brand for the sixth consecutive year. Shutterstock

The Kingdom’s economy remains heavily influenced by its core sectors — energy, banking, and telecommunications — which together represent nearly 74 percent of the total brand value in the rankings. This sector concentration underscores Saudi Arabia’s ongoing economic diversification efforts as part of its Vision 2030 strategy. 

Andrew Campbell, managing director, Brand Finance Middle East, said: “Saudi Arabia’s brand landscape is evolving at an impressive pace, driven by bold strategies, innovation, and a clear vision for the future.” 

He added: “From long-standing powerhouses like Aramco and stc to fast-rising brands like Saudia and Almarai, there’s a real sense of momentum across sectors. These brands are not only contributing to the Kingdom’s economic transformation but also setting new benchmarks for excellence in the region and beyond.” 

The report further revealed that stc ranked as the Kingdom’s second most valuable brand in 2025, with a valuation of $41.7 billion, up 16 percent year on year. 

This growth is primarily linked to the successful implementation of its Masterbrand strategy, which facilitated expansion into sectors like banking, cybersecurity, B2B, and IT services through strategic mergers and acquisitions. 

stc ranked as the strongest brand in Saudi Arabia, earning a Brand Strength Index score of 88.7 out of 100 and an AAA rating. File/Reuters

The report by the London-based brand valuation consultancy showed that stc is also ranked as the strongest brand in Saudi Arabia, earning a Brand Strength Index score of 88.7 out of 100 and an AAA rating. Its continued investment in 5G infrastructure and digital financial services has solidified its position as a telecom leader. 

An AAA rating is the highest possible credit or brand strength rating, indicating robust reliability, quality, and performance. 

With brand value up 20 percent to $4.7 billion, Dairy producer Almarai is recognized as the Kingdom’s third strongest brand, earning a Brand Strength Index score of 85.5 out of 100 and an AAA brand strength rating. 

Almarai is also ranked as the top brand in Saudi Arabia for environmental, social, and governance performance. Almarai

This follows the brand’s collaboration with Google Cloud, launched in November, which is driving its digital transformation and enhancing operational efficiency. 

Almarai is also ranked as the top brand in Saudi Arabia for environmental, social, and governance performance, underscoring its strong commitment to ethical business practices, sustainable farming, and reducing carbon emissions. 

As for Saudia, its brand value surged by 34 percent to reach $1.1 billion in January, making it the fastest-growing Saudi brand and marking its first time crossing the billion-dollar milestone. 

Saudia’s brand value surged by 34 percent to reach $1.1 billion in January. Wikipedia

This achievement is largely attributed to the airline’s bold rebranding, along with advances in AI-driven customer service and infrastructure upgrades, which have significantly boosted its global brand visibility. 

The report further revealed that ROSHN Group, with a brand value of $1.1 billion, is the highest-ranked new entrant in the Kingdom this year. It also became the most valuable real estate brand in the country and secured a place among the top 20 brands overall. This debut reflects the company’s strong financial performance and ambitious expansion strategy. 

“Saudi Arabia’s brand landscape is evolving at an impressive pace, driven by bold strategies, innovation, and a clear vision for the future. It’s particularly exciting to see new entrants like ROSHN Group make such a strong debut, showing that diversification and ambition are paying off,” Campbell added. 


Saudi Arabia doubles funding to Union of Arab Chambers

Updated 22 May 2025
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Saudi Arabia doubles funding to Union of Arab Chambers

  • Expanded support will significantly enhance UAC’s capacity to deliver programs and initiatives empowering the Arab private sector
  • FSC and UAC are working to boost intra-Arab trade and expand access to third markets

JEDDAH: Saudi Arabia has doubled its financial contribution to the Union of Arab Chambers, a decisive move aimed at reinforcing regional economic integration and boosting private sector cooperation across the Arab world.

The Federation of Saudi Chambers announced the increase on Tuesday, stating that the expanded support will significantly enhance the UAC’s capacity to deliver programs and initiatives that empower the Arab private sector and foster closer economic ties among member states.

The decision underscores the Kingdom’s growing leadership role in regional economic affairs and comes at a time when calls for deeper intra-Arab collaboration are intensifying. A 2023 report from the UN Economic and Social Commission for Western Asia warned of declining exports and over-reliance on limited markets, urging Arab countries to diversify and strengthen intra-regional trade.

Despite shared economic interests, intra-Arab trade made up just 13.8 percent of the region’s total foreign trade by late 2024—a figure FSC President Moejeb Al-Hwaizy described as “modest” in comparison to other global economic blocs. Al-Hwaizy was elected first vice president of the UAC during its 135th session in Qatar.

The FSC noted that Saudi Arabia’s enhanced contribution reflects its “strategic responsibility” as the UAC’s largest financial backer and soon-to-be president. “This is an extension of the federation’s role in supporting the private sector at the local, regional, and international levels,” it said.

The Kingdom’s leadership in the UAC, founded in 1951 and comprising chambers from all Arab League member states, highlights its broader ambition to promote joint Arab economic action, unlock cross-border investment, and facilitate closer coordination among private sector leaders.

With several joint initiatives already underway, the FSC and UAC are working to boost intra-Arab trade and expand access to third markets through business partnerships and strategic cooperation.

As the only Arab country in the G20 and the region’s largest economy, Saudi Arabia’s growing influence in Arab economic institutions signals its continued commitment to fostering unity and resilience in a rapidly evolving global trade environment.