### Summary
Saudi Arabia's stock market ended higher on Sunday due to the rise in oil prices, although gains were limited as investors awaited further interest rate insight from the U.S. Federal Reserve.
### Facts
- 📈 Saudi Arabia's benchmark index gained 0.4%.
- 🚀 Petrochemical maker Saudi Basic Industries Corp rose 1.7%.
- 💹 Riyad Bank increased by 1.8%.
- ⛽️ Oil prices rose about 1% following a slump in U.S. crude production, leading to an anticipated supply tightness.
- 👥 Qatar's index edged 0.1% higher, boosted by a 1.3% gain in Commercial Bank.
- 📰 Investors will scrutinize a speech from Fed Chair Jerome Powell on Friday for clues about the interest rate outlook.
- 💱 Gulf countries tend to follow the Fed's rate move as most regional currencies are pegged to the U.S. dollar.
- 🇰🇼 Only the Kuwaiti dinar is pegged to a currency basket that includes the dollar.
- 📈 Egypt's blue-chip index added 0.4%, with tobacco monopoly Easter Company advancing 2.9%.
Oil prices rise as global supply tightens due to lower exports from Saudi Arabia and Russia, offsetting concerns about global demand growth amid high interest rates.
Saudi Arabia's stock market ended higher due to an increase in oil prices, but gains were limited as investors awaited further interest rate insight from the U.S. Federal Reserve.
The Saudi government's efforts to diversify the economy away from oil and promote private sector growth are showing progress across four dimensions: exports, output, government revenue, and employment, although oil remains a dominant force in the economy.
Crude oil prices are trying to recover and show signs of support, with a "buy on the dips" attitude prevailing due to Saudi Arabia holding 1 million barrels per day out of the market, although supply concerns may arise despite a global slowdown.
Saudi Arabia's robust diversification efforts, driven by Vision 2030 strategies, have resulted in a surge of business activities and economic growth, despite worldwide economic uncertainty and concerns over inflation and geopolitical tensions. The country's economic diversification journey has led to the opening of new sectors and advancements in fields such as tourism, media, finance, and clean energy, making it a regional economic and technology hub. Saudi Arabia's continued focus on sectors like mining, metals, hospitality, tourism, and clean energy, along with fiscal consolidation efforts and revenue-enhancing measures, are key to sustaining its economic diversification model.
Main Topic: Saudi Arabia's robust economic diversification efforts driven by Vision 2030 strategies.
Key Points:
1. Saudi Arabia's economic diversification efforts have led to a surge in business activities despite global economic uncertainty.
2. The country has made significant improvements in its Economic Diversification Index scores and has opened new sectors in tourism, media, hospitality, finance, and the digital sphere.
3. Investment in digital transformation and the clean energy sector are expected to contribute to sustained economic growth and make Saudi Arabia a regional economic and technology hub.
Saudi Arabia experienced a sharp decline in its foreign reserves, with a drop of over $16 billion last month, marking the largest decrease since the negative oil prices during the pandemic as the country invested in US stocks using its savings.
Saudi Arabia, as a new member of the BRICS economic alliance, plans to invest $16 billion from its foreign reserves, signaling a shift towards prioritizing investment over reserves and potentially bolstering the bloc's ongoing initiatives.
A group of oil analysts and economists have raised their 2023 oil price forecasts, predicting Brent crude will average $82.45 a barrel and that Saudi Arabia is likely to extend its voluntary oil supply cut into October.
The expansion in non-oil business activity in Saudi Arabia eased in August due to slower output growth and concerns over market competition, according to a business survey.
Oil prices jumped over 2.5% after OPEC+ members extended supply reductions, with Brent International topping $90 per barrel and West Texas Intermediate hovering above $87 per barrel, as Saudi Arabia announced an extension of its production cut and Russia reduced its exports. Despite slow recovery and increased production, crude futures have rallied more than 25% since late June, with experts predicting prices to continue rising unless a recession occurs. China's demand for petrochemicals has been dampened, but their mobility demand post-lockdowns has offset this.
Saudi Arabia and Russia have announced that they will extend voluntary oil cuts until the end of the year, despite a rally in the oil market and expectations of tight supply, contributing to a rise in oil prices and posing a fresh blow to US President Joe Biden.
Oil prices reached a new high for the year after Saudi Arabia and Russia agreed to extend output cuts, reinforcing efforts to support oil prices by the OPEC+ alliance.
Oil prices rose in early Asian trade after Saudi Arabia and Russia extended their voluntary supply cuts to the end of the year, leading to concerns about a supply shortage and higher oil prices worldwide.
Summary: Rising oil prices and increasing gas prices, driven by the Russian-Saudi agreement to extend oil production cuts, are contributing to inflation concerns and putting pressure on the markets, leading to potential gains for oil stocks like ConocoPhillips and Chevron.
Oil prices ease as uncertain economic outlook for China outweighs expectations of tighter supplies from extended supply cuts in Saudi Arabia and Russia.
Saudi Arabia is set to increase its crude supplies to China as new refining capacity lifts offtake, aiming to regain lost market share in the country. Meanwhile, China's huge zinc imports have revived hopes for economic growth in the second half of 2023.
The US continues to see draws in crude inventories, tightening markets, despite Saudi Arabia and Russia's extension of production and export cuts, as well as other energy news such as the cancellation of Alaskan drilling, Kurdistan's demand for funds, and the spike in jet fuel costs.
If Saudi Arabia continues to keep its output low, oil prices could surpass $100 as the market has yet to experience the full impact of its production cuts, according to Vortexa.
The price of oil is surging as Saudi Arabia and Russia cut output, creating a supply deficit that is driving up prices and threatening a fragile global economy with inflation and potential interest rate hikes.
Saudi Arabia is undergoing a major transformation through its Vision 2030 plan, led by Crown Prince Mohammed Bin Salman, aiming to diversify its economy and secure its place on the global stage; despite controversies and challenges, the country's economy is booming, heavily reliant on oil, and is making significant investments at home and abroad.
Most stock markets in the Gulf rose in response to a rise in oil prices, except for the Saudi index which closed lower; however, the International Monetary Fund predicts a further slowdown in Saudi Arabia's GDP growth due to the extension of oil production cuts.
Oil prices fell due to a stronger US dollar and concerns about Chinese economic growth, but were supported by extended supply cuts by Saudi Arabia and Russia.
The extension of voluntary oil production cuts by Saudi Arabia and Russia has caused oil prices to surge above $90 a barrel, threatening an inflationary spike that could disrupt central banks' plans to wind down interest-rate hikes, particularly for the Bank of Canada.
The United States is in regular contact with Saudi Arabia to ensure a stable and affordable supply of energy to global markets, according to National Security Advisor Jake Sullivan. This comes as cuts in oil output by Saudi Arabia and Russia are expected to result in a significant market deficit.
Oil prices continue to rise as OPEC+ supply cuts tighten the market, with Brent crude surpassing $94 a barrel and speculators increasing bullish wagers on Brent and West Texas Intermediate, leading to concerns about inflationary pressures.
Oil prices increased for a third consecutive session due to forecasts of a supply deficit in the fourth quarter, the extension of output cuts by Saudi Arabia and Russia, and optimism about a recovery in demand in China.
The International Energy Agency warns of a deepening oil market deficit in the fourth quarter due to extended Saudi and Russian production cuts, leading to diesel shortages and higher fuel prices impacting sectors such as construction, transport, and farming.
Gasoline prices are rising due to oil supply cuts in Saudi Arabia and Russia, as well as flooding in Libya, but some experts believe that increasing oil prices will not have a significant impact on the US economy and do not expect them to rise much higher in the next year or two due to factors such as increased US oil production, slow global economic growth, and the green energy transition. However, high oil prices can lead to higher inflation, potential recession, and could influence the Federal Reserve to raise interest rates, but the impact may not be as severe as in the past, and some experts recommend investing in the energy transition and adopting a more defensive investment strategy.
Top Saudi Arabian and U.S. oil producers Aramco and Exxon Mobil have pushed back forecasts of peak oil demand and emphasized the need for continued investment in conventional oil and gas, stating that the energy transition will require more time and investment.
Saudi Arabia's energy minister, Prince Abdulaziz bin Salman, stated that the decision to extend crude oil supply cuts with Russia is not about raising prices, but rather about making the right decision at the appropriate time based on data and clarity, as oil prices near $100 per barrel and analysts predict further increases.
Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman defends OPEC+ cuts to oil supply, citing the need for light-handed regulation to limit market volatility and expressing uncertainty about Chinese demand, European growth, and central bank action to tackle inflation.
Oil prices have risen due to Saudi Arabia's decision to cut back oil production, which has led to higher gasoline and diesel prices, complicating the global fight against inflation and benefiting Russia's economy.
Rising oil prices, driven by production cuts from Saudi Arabia and Russia, could have long-term economic repercussions, particularly in developing countries.
Saudi Arabia's economy is experiencing growth in non-oil sectors, driven by strong domestic demand and increased investment, but sustaining this growth will require ongoing reforms and sound macroeconomic policies.
Saudi Arabia may soon end its production cuts to avoid demand collapse and prevent excessively high oil prices, according to Bob McNally of Rapidan Energy Group.
Saudi Arabia is planning to raise funds from international debt markets to cover a projected budget deficit in 2023-2024 due to lower oil prices and extended oil production cuts, with deficits estimated at $43 billion; however, the country's strong non-oil economy is expected to support growth.
The secretary general of Opec+ predicts that oil prices will remain high due to increasing energy demand, as Saudi Arabia cuts its crude oil production by a million barrels a day and warns of a potential supply shortfall.
Saudi Arabia, a new member of the BRICS alliance, is expected to face a $21 billion budget deficit next year despite growth in its non-oil sector, though its GDP growth is still projected to exceed 4%.
Oil prices fell due to concerns about demand driven by macroeconomic headwinds, despite pledges from Saudi Arabia and Russia to continue crude output cuts until the end of 2023.
Saudi Arabia and Russia have announced that they will continue voluntary oil cuts until the end of the year, in response to tightening supply and rising demand.
Saudi Arabia and Russia have confirmed that they will maintain their oil supply cuts in November, despite the recent rise in oil prices.
Saudi Aramco, the world's largest oil exporter, has raised the price of its crude oil for November, with substantial increases for Europe and the Mediterranean markets.
OPEC+ decides to maintain current oil production cuts, causing a drop in crude oil prices despite the potential need for higher prices to impact demand, with oil demand booming in China and India but declining in the US.
