OPEC+ agrees output cut of 2 million barrels per day despite US concerns

OPEC+ producers are expected to agree to a deep cut in their output target. (Shutterstock)
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Updated 06 October 2022
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OPEC+ agrees output cut of 2 million barrels per day despite US concerns

  • OPEC+ fell about 3.6 million bpd short of its output target in August

RIYADH: Oil prices edged up after the Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed an output reduction of 2 million barrels per day from November — its deepest cuts since the 2020 COVID-19 pandemic.

The decision was made during OPEC+'s Joint Ministerial Monitoring Committee in-person meeting in Vienna, and could prompt a recovery in oil prices that have dropped to about $90 from $120 three months ago on fears of a global economic recession, rising US interest rates and a stronger dollar.

Sources told Reuters it was unclear if cuts could include additional voluntary reductions by members such as Saudi Arabia, or if they could include existing under-production by the group.

OPEC+ fell about 3.6 million bpd short of its output target in August.

After the decision was revealed, oil prices rose, with Brent crude up 0.38 percent to $92.15 a barrel at 04.30 p.m Saudi time, while US West Texas Intermediate went up 0.29 percent to $86.77 per barrel.

Following the meeting, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman, said the alliance’s priority was “to maintain a sustainable oil market.”

Wednesday's production cuts of 2 million bpd are based on existing baseline figures, which means the cuts would be less deep because OPEC+ fell about 3.6 million bpd short of its output target in August.
Under-production happened because of Western sanctions on countries such as Russia, Venezuela and Iran and output problems with producers such as Nigeria and Angola.
Prince Abdulaziz said the real cuts would be 1-1.1 million bpd.

Mohammed Al Suwayed, CEO of investment advisory company Razeen Capital, warned the move could fuel the global price increases currently tearing through the world's economy.

Speaking to Arab News, he said: “In my opinion, the production cut means increasing oil prices, hence more revenues to oil producers. But the decision itself doesn’t look like is related to market fundamentals, so we should brace for more interest rate hikes due to an expected additional increase in inflation.”

Hassan Balfakeih, former chief oil demand analyst at OPEC Secretariat, told Arab News that current oil prices are more reflective of “geopolitical developments” than “true market fundamentals.”

He added: “Already elevated inflationary pressures and a fragile economic outlook could dampen oil demand in the coming months. 

“To avoid a possible weakening of oil market fundamentals, (a) proactive and solid decision is critical to balance the market over the short-term.”

OPEC+ also annnounced the frequency of the Joint Ministerial Monitoring Committee meetings will be changed to every two months.

US response

The cuts come despite US pressure to pump more, and will curb supply in an already tight market.

The move drew a swift rebuke from US President Joe Biden. “The president is disappointed by the shortsighted decision by OPEC+,” National Security Adviser Jake Sullivan and top economic adviser Brian Deese said in a statement.
The supply cut will hit countries “already reeling” from high prices while “the global economy is dealing with the continued negative impact” of Russia's attack on Ukraine, the statement said.

US Secretary of State Antony Blinken said on Wednesday the White House is working to ensure energy supply is on the market and that prices are low.

Asked at a press conference in Chile if he was disappointed in Saudi Arabia for agreeing to the cuts, Blinken said Washington has a "multiplicity of interests with regard to Saudi Arabia."

"We are working every single day to make sure to the best of our ability that, again, energy supply from wherever is actually meeting demand in order to ensure that energy is on the market and the prices are kept low," Blinken said.

John Kirby, national security council coordinator for strategic communications at the White House, said his country should be less dependent on OPEC+ and foreign producers for oil.

Speaking to Fox News, he sought to play down the decision, saying: “OPEC+ has been saying, telling the world they're actually producing three and a half million more barrels than they actually are. So, in some ways this announced decrease really just kind of gets them back into more aligned with actual production."

His comments were at odds with some analysts, US investment bank Citi warning there could be retaliation.

“There could be further political reactions from the US, including additional releases of strategic stocks, along with some wildcards including further fostering of a NOPEC bill,” Citi said, referring to a US antitrust bill against OPEC.

JPMorgan also said it expected Washington to put in place countermeasures by releasing more oil stocks, while Andy Critchlow, head of news for Europe, the Middle East and Africa at S&P Global Commodity Insights warned that OPEC+ was “playing with fire”  in a volatile geopolitical environment.

Decision is “technical, not political” 

Saudi Arabia and other members of OPEC+ have previously said they seek to prevent volatility rather than to target a particular oil price when considering production targets.

On his way into the meeting, UAE Energy Minister Suhail Al-Mazroui told reporters that any decision is “technical, not political,” adding: “We will not use it as a political organization.”

The decision from OPEC+ comes at a time when the global oil market, especially European countries, face energy products shortage after they decided to gradually stop their dependence on Russian energy exports in the wake of Vladimir Putin’s invasion of Ukraine

Ahead of the meeting, a report by King Abdullah Petroleum Studies and Research Center suggested effective Western sanctions on Russia could make the global oil market tighter, as picking viable alternatives to replace the country’s energy exports seem difficult. 

The report noted that the US and Canada have successfully swapped imports, as these nations were not dependent on Russian imports in the past.

However, European countries face challenges as they depend heavily on Moscow to fulfill their energy needs.

 

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Oman sovereign wealth authority in preliminary pact with Algeria for investment fund

Updated 41 min 53 sec ago
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Oman sovereign wealth authority in preliminary pact with Algeria for investment fund

CAIRO: The Oman Investment Authority signed a preliminary agreement with Algeria’s Finance Ministry to establish an investment fund worth 115 million Omani riyals ($298.79 million).

The fund, announced by the sultanate’s sovereign wealth fund, will focus on mining, food security and pharmaceutical industries, according to a statement by the OIA.

The agreement was signed on the sidelines of an official visit by Oman’s Sultan Haitham bin Tariq Al-Said to the North African country.

Several agreements were signed during the visit, including a term sheet between Algeria’s state oil and gas firm Sonatrach and Oman’s oil and gas drilling services firm Abraj Energy Services to evaluate setting up a joint venture for oil services.

The term sheet outlines the technical, legal and economic and commercial conditions to evaluate establishing an oil services joint venture company in Algeria between the two companies, Sonatrach said in a statement on Monday.

The joint venture will focus on drilling, well services and management of integrated projects in the Algerian market, according to the statement.

 


Oil Updates — crude climbs $1 as price drop triggers buying; oversupply worries weigh

Updated 06 May 2025
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Oil Updates — crude climbs $1 as price drop triggers buying; oversupply worries weigh

SINGAPORE: Oil gained more than $1 per barrel on Tuesday, rebounding on technical factors and bargain hunting after a decision by OPEC+ to boost output sent prices down the previous session, although concerns about the market surplus outlook persisted.

Brent crude futures rose $1.15 to $61.38 a barrel by 9:23 a.m. Saudi time, the first time gain after six consecutive declines, while US West Texas Intermediate crude added $1.11 to $58.24 a barrel.

Both benchmarks had settled at their lowest since February 2021 on Monday, driven by an OPEC+ decision over the weekend to further speed up oil production hikes for a second consecutive month.

“Today’s slight rebound in oil prices appears more technical than fundamental,” said Yeap Jun Rong, a market strategist at IG. “Persistent headwinds including a pivotal shift in OPEC+ production strategy, uncertain demand amid US tariff risks, and price forecast downgrades are continuing to weigh on the broader price movement.”

Driven by expectations that production will exceed consumption, oil has lost over 10 percent in six straight sessions and dipped over 20 percent since April when US President Donald Trump’s tariff shocks prompted increased bets on a slowdown in the global economy.

The return of Chinese market participants after a five-day public holiday since May 1 was seen supporting prices on Tuesday.

“China also reopened today, and being the largest importer, buyers would have likely jumped to secure oil at current low levels,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Also lending some support was data showing a pick-up in services sector’s growth in the US, the world’s major oil consumer, as orders increased.

The Institute for Supply Management said on Monday its nonmanufacturing purchasing managers index  increased to 51.6 last month from 50.8 in March. Economists polled by Reuters had forecast the services PMI dipping to 50.2.

The US Federal Reserve will likely leave interest rates unchanged on Wednesday as tariffs roil the economic outlook.

Barclays lowered its Brent crude forecast on Monday by $4 to $70 a barrel for 2025 and set its 2026 estimate at $62 a barrel, citing “a rocky road ahead for fundamentals” amid escalating trade tensions and OPEC+’s pivot in its production strategy.

Goldman Sachs also lowered its oil price forecast on Monday by $2-3 per barrel, as they now expect another 400,000 barrels per day production increase by OPEC+ in July. 


Saudi Arabia leads MENA startup funding in April with $158.5m  

Updated 05 May 2025
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Saudi Arabia leads MENA startup funding in April with $158.5m  

RIYADH: Saudi Arabia led startup funding across the Middle East and North Africa in April 2025, attracting $158.5 million across eight deals — accounting for more than two-thirds of the region’s total investment for the month. 

The Kingdom’s dominant performance was largely driven by iMENA Group’s $135 million pre-initial public offering round, placing it ahead of the UAE, which followed with $62 million raised across nine startups. 

In total, MENA startups secured $228.4 million in April through 26 deals, marking a 105 percent increase from March and nearly triple the amount raised in April 2024, according to Wamda’s monthly report.  

Notably, the month’s funding activity featured no debt financing.

“Interestingly, the absence of debt-financed deals in April highlights growing investor confidence in equity-based funding — a trend reflecting a healthier capital environment,” the report stated.  

Morocco ranked third regionally, raising $4 million across two startups, while Egypt lagged behind with just $1.5 million secured by four companies. 

Early-stage ventures led in deal volume, bringing in $49 million through 20 transactions. Late-stage activity was concentrated entirely in iMENA’s pre-IPO round. 

By sector, fintech remained the top draw for investors, attracting $44 million across seven transactions. Traveltech also gained momentum, driven by HRA Experience’s deal, while e-commerce startups raised $2.5 million across three deals. 

Software-as-a-service ventures made a comeback after a quiet first quarter, securing $1.8 million from three transactions.  

In terms of business models, business-to-business startups dominated, raising $180 million across 12 deals.  

Business-to-consumer ventures followed with $43 million from seven transactions, while six companies operating both B2B and B2C models accounted for the rest of the disclosed funding. 

Gender disparities in startup funding persisted in April. Female-led startups secured less than $500,000 in total, while male-founded ventures captured 97 percent of all disclosed capital. Startups co-founded by men and women raised an additional $6.5 million. 


Closing Bell: Saudi main index closes in green at 11,422 

Updated 05 May 2025
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Closing Bell: Saudi main index closes in green at 11,422 

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Monday, gaining 11.45 points, or 0.10 percent, to close at 11,422.95. 

The total trading turnover of the benchmark index was SR5.21 billion ($1.39 billion), as 153 stocks advanced, while 84 retreated. 

The Kingdom’s parallel market, Nomu, also rose, gaining 129.67 points, or 0.46 percent, to close at 28,142.99. This comes as 41 of the listed stocks advanced, while 33 retreated. 

The MSCI Tadawul Index increased by 4.27 points, or 0.29 percent, to close at 1,455.44. 

The best-performing stock was Mouwasat Medical Services Co., with its share price surging 9.97 percent to SR78.30. 

Other top performers included Fawaz Abdulaziz Alhokair Co., which saw its share price rise 9.92 percent to SR14.18, and Saudi Reinsurance Co., which posted a 9.71 percent gain to reach SR53.10. 

Umm Al Qura for Development and Construction Co. recorded the day’s steepest decline, with its share price slipping 3.47 percent to SR25.05.   

Sahara International Petrochemical Co. and Saudi Steel Pipe Co. also saw declines, with their shares dropping by 2.82 percent and 2.58 percent to SR17.90 and SR52.90, respectively.   

On the announcements front, Ades Holding Co. reported interim financial results for the first three months of the year, posting a net profit of SR196.6 million — a 6.3 percent decline compared to the previous quarter. It said that the drop in net profit reflects an increased ratio of depreciation and tax costs to revenue in this period.   

The company’s total comprehensive income saw a 45.7 percent quarter-on-quarter decrease in the first quarter of 2025 to reach SR170.8 million.  

Ades Holding Co.’s share price traded 0.94 percent lower on the main market during today’s session to reach SR14.78.   

In another announcement, Makkah Construction and Development Co. reported a 32.7 percent year-on-year increase in net profit for the same period, reaching SR150 million.   

The company credited the growth to higher revenues from the hotel and towers this quarter, driven by the inclusion of the last nine days of Ramadan, increased mall revenues, and gains from financial assets classified at fair value through profit or loss.   

Similarly, the company’s total comprehensive income rose to SR758 during the quarter, up from SR576 last year.   

The MCDC’s share price traded 1.5 percent higher to reach SR108.20. 


Saudi Arabia posts $15.6bn budget deficit in Q1 with resilient non-oil growth

Updated 05 May 2025
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Saudi Arabia posts $15.6bn budget deficit in Q1 with resilient non-oil growth

RIYADH: Saudi Arabia recorded a deficit of SR58.7 billion ($15.65 billion) in the first quarter of 2025, driven by declining oil revenues and increased spending to support Vision 2030 development initiatives, according to the Finance Ministry.

According to the quarterly budget performance report, total revenues reached SR263.61 billion, marking a 10.16 percent decline compared to the same period last year.

The drop is primarily attributed to reduced oil revenues, which fell 17.65 percent year on year to SR149.81 billion, driven by ongoing OPEC+ production cuts that curbed export volumes despite relatively steady global oil prices.

Oil income accounted for 56 percent of total government revenues, down from 62 percent in Q1 2024.

In contrast, non-oil revenues continued to grow modestly, rising 2.06 percent to SR113.81 billion, underpinned by structural economic reforms and the Kingdom’s diversification agenda under Vision 2030.

Taxation on goods and services remained the largest contributor to non-oil income, generating SR71.56 billion—up 2.37 percent year on year. Other non-oil revenue sources, including fees and investment returns, added SR25.41 billion, making up 22.3 percent of the non-oil total.

Total government expenditures in the quarter rose 5.39 percent year on year to SR322.32 billion. The increase reflects Saudi Arabia’s continued investment in strategic initiatives and priority development projects aligned with Vision 2030 goals.

Compensation for government employees remained the largest expenditure category, totaling SR146.09 billion—an annual increase of 6.24 percent—and accounting for 45.3 percent of total spending.

Expenditures on goods and services amounted to SR64.63 billion, or 20 percent of the quarterly total, while capital spending represented 8.6 percent. Other operational costs comprised 10.6 percent.

The first quarter deficit was entirely financed through debt instruments, pushing Saudi Arabia’s total public debt to SR1.33 trillion—up 19.08 percent from a year earlier.

Of this, 60 percent was sourced domestically, with the remainder attributed to external borrowing, in line with the Kingdom’s debt diversification strategy.

Despite the fiscal shortfall, the ministry noted that the quarterly figures remain consistent with the government’s 2025 budget plan. Revenues in the first quarter represent 22.3 percent of the full-year target, while expenditures account for 25 percent of the planned annual spend.

Looking ahead, Saudi Arabia’s fiscal outlook may receive a boost from higher oil output. OPEC+ recently announced plans to accelerate the unwinding of prior production cuts, including a June increase of 411,000 barrels per day. Combined with earlier boosts in April and May, the group plans to restore a total of 960,000 barrels per day—reversing 44 percent of the 2.2 million bpd reduction agreed upon in December 2024.