Oil Updates – crude rises on risk of broadening Middle East conflict

Oil Updates – crude rises on risk of broadening Middle East conflict
A section of the BP ETAP (Eastern Trough Area Project) oil platform in the North Sea, around 100 miles east of Aberdeen, Scotland. File/AFP
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Updated 01 August 2024
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Oil Updates – crude rises on risk of broadening Middle East conflict

Oil Updates – crude rises on risk of broadening Middle East conflict
  • Global benchmark Brent crude futures rose 71 cents to $81.55 a barrel
  • Intermediate crude futures gained 76 cents to $78.67 a barrel

SINGAPORE: Oil prices rose during Asian trade on Thursday, extending gains from the previous session, after the killing of a Hamas leader in Iran raised the threat of a wider Middle East conflict and concern over its impact on oil.
Global benchmark Brent crude futures rose 71 cents, or 0.9 percent, to $81.55 a barrel by 8:05 a.m. Saudi time, while US West Texas Intermediate crude futures gained 76 cents, or 1 percent, to $78.67 a barrel.
The most active contracts on both benchmarks jumped about 4 percent in the previous session.
Hamas leader Ismail Haniyeh was killed in the Iranian capital Tehran on Wednesday. His death came less than 24 hours after the most senior military commander of Lebanon-based Hezbollah was killed in an Israeli strike in Beirut.
The killings fueled concern that the 10-month-old war in Gaza between Israel and Hamas was turning into a wider Middle East war, which could lead to disruption in oil supply from the region.
“Oil markets are justifiably worried that the assassination of Haniyeh will bring Iran more directly into the war with Israel. And that could put at risk Iran’s oil supply and related infrastructure,” said analyst Vivek Dhar at Commonwealth Bank of Australia, said in a client note.
Dhar said markets will be worried about Iran’s ability to escalate tension via its control of the Strait of Hormuz.
“Blockading the key waterway threatens the transport of 15-20 percent of global oil supply. With limited spare pipeline capacity to bypass such a blockade, the Strait of Hormuz looms as a major potential disruption risk for oil markets,” said Dhar.
Also pushing up prices was a set of data releases from the US, the world’s biggest oil consumer, and a weaker dollar.
Robust export demand pushed US crude oil stockpiles lower by 3.4 million barrels in the week ended July 26 to 433 million barrels, data from the US Energy Information Administration showed on Wednesday.
Meanwhile, the US dollar index extended losses on Thursday from the previous session, after the Federal Reserve held interest rates but left the door open for a cut in September. A weaker dollar can boost oil demand from investors holding other currencies.
In the longer term, however, investors are not confident of Chinese demand, said Phillip Nova analyst Priyanka Sachdeva, adding that this concern will continue to limit the upside in oil prices.
Official data from China on Wednesday showed that manufacturing activity slipped to a five-month low in July as factories grappled with falling new orders and low prices.
A private sector survey on Thursday also showed China’s manufacturing activity in July shrank for the first time in nine months as new orders declined.


Oman’s credit balance reaches $81.6bn in August 

Oman’s credit balance reaches $81.6bn in August 
Updated 12 sec ago
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Oman’s credit balance reaches $81.6bn in August 

Oman’s credit balance reaches $81.6bn in August 

RIYADH: Oman’s total credit balance in the banking sector grew 3.3 percent in August, reaching 31.4 billion Omani rials ($81.6 billion), official data showed. 

According to figures issued by the Central Bank of Oman, the private sector saw a 2.8 percent increase in credit, totaling 26.3 billion rials by the end of August.  

The central bank’s data revealed that non-financial companies accounted for the largest share of credit at 44.9 percent, closely followed by individuals at 45.2 percent. Financial firms represented 6.4 percent, while other sectors made up the remaining 3.5 percent. 

The increase in credit figures indicates a robust and expanding economic environment in Oman, characterized by a greater flow of funds throughout the economy. 


Saudi restaurant and cafe sales boost August POS spending to $15.6bn

Saudi restaurant and cafe sales boost August POS spending to $15.6bn
Updated 37 min 22 sec ago
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Saudi restaurant and cafe sales boost August POS spending to $15.6bn

Saudi restaurant and cafe sales boost August POS spending to $15.6bn

RIYADH: Saudi Arabia’s point-of-sale spending reached around SR58.51 billion ($15.6 billion) in August, marking a 9.67 percent rise compared to the same month last year, according to the latest data.

Figures from the Saudi Central Bank, known as SAMA, revealed that 36 percent of POS spending during this period — totaling SR16.55 billion — was spent on beverages, food, restaurants, and cafes, reflecting a 4.72 percent increase. This growth was primarily driven by higher spending in restaurants and cafes.

An additional 6.2 percent, amounting to SR3.63 billion, was allocated to clothing and footwear, while health and transportation each accounted for approximately 6 percent, or SR3.38 billion, of the total.

The strongest growth in POS spending during this period was in jewelry sales, which rose by 15 percent to SR982.15 million. Telecommunications also grew by 14 percent to SR493.5 million, although it represented only 1 percent of the total share. 

Expenditure on miscellaneous goods and services, including personal care, supplies, maintenance, and cleaning, saw a 12 percent increase, reaching SR6.56 billion in August.

The rise in POS spending across Saudi Arabia, particularly in the hospitality sector, is attributed to several interrelated factors that reflect the Kingdom’s ongoing economic transformation and digitalization initiatives. 

As technology adoption accelerates and consumers increasingly prefer cashless transactions, businesses are recognizing the need for robust POS systems to enhance operational efficiency and customer experiences.

The hospitality industry is at the forefront of this trend, driven by a flourishing tourism sector and government efforts to diversify the economy away from oil dependence. 

With Saudi Arabia hosting more international events and attracting tourists, hospitality operators are investing in advanced POS solutions to streamline service delivery, optimize inventory management, and leverage data analytics for valuable insights.

Additionally, the rise of digital payment options, driven by a young and tech-savvy demographic, is further accelerating this spending trend, as customers seek seamless and convenient payment experiences. 

In this dynamic landscape, TRAY, a leader in cloud-native POS systems, has expanded its partnership with Alraedah Finance, a prominent provider of financial and digital solutions in Saudi Arabia.

Alraedah’s significant financial investment will bolster TRAY’s development of its POS technology and support for enterprise customers. Alraedah Digital Solutions will also provide expertise in data analytics, product development, and system integration. This partnership, initiated in 2023 through a reseller agreement, aims to deliver cutting-edge POS solutions to both small and medium-sized enterprises and larger companies across the MENA region.   

Already, the collaboration has improved business operations for customers in the Kingdom and is set to enhance service offerings, including POS financing, while further supporting the development of the SME sector, particularly in the hospitality industry. 

Declining spending

Public utilities sales, however, saw a decline of 35 percent year on year, reaching SR324.7 million. Over the first eight months of 2024, spending in this sector decreased by 23 percent compared to the same period in 2023.

This drop can be attributed to privatization efforts in the Gulf’s utility sector.

With greater private sector participation, particularly in water desalination and power generation, companies like ACWA Power have implemented more efficient technologies and renewable energy solutions, driving down costs.

Innovations such as solar-powered desalination plants and tariff reforms have reduced utility bills, encouraging responsible consumption and promoting sustainability.

Spending on electronic and electric devices also dropped by 15 percent, reaching SR878.5 million. According to SAMA data, sales in this sector have fluctuated due to factors such as seasonal promotions, new product launches, and changing economic conditions. 

Figures also showed that Riyadh led in POS sales distribution in August with 34 percent, reaching about SR20 billion, followed by Jeddah, which accounted for 14 percent, totaling SR8.16 billion.

The capital’s vibrant hospitality scene, bolstered by a surge in both local and international tourism, has driven demand for advanced POS solutions in restaurants, cafes, and retail establishments. 

Furthermore, significant government initiatives aimed at diversifying the economy and promoting the tourism sector have led to increased consumer activity and spending.

Riyadh’s growing population, coupled with a young, tech-savvy demographic that favors cashless transactions, further contributes to its dominance in POS spending, positioning the city as a key player in the Kingdom’s evolving digital economy.   


Saudi Arabia and Spain discuss opportunities in drone and automotive industries 

Saudi Arabia and Spain discuss opportunities in drone and automotive industries 
Updated 37 min 1 sec ago
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Saudi Arabia and Spain discuss opportunities in drone and automotive industries 

Saudi Arabia and Spain discuss opportunities in drone and automotive industries 
  • Alkhorayef held discussions with Ana Maria Alonso-Zarza, director of the Spanish Geological and Mining Institute, to explore opportunities in geological research
  • Alkhorayef also met with Spain’s Industry and Tourism Minister Jordi Hereu and Economy, Trade, and Business Minister Carlos Cuerpo to discuss enhancing economic relations and increasing Spanish investment in the Kingdom

RIYADH: Saudi Arabia is exploring partnerships with Spanish companies in drone technology, automotive components, and geological surveying, as the Kingdom’s industry minister held talks with business leaders in Madrid. 

During the meeting, Saudi Industry and Mineral Resources Minister Bandar Alkhorayef discussed localizing the production of heavy-duty drones, automotive parts, and shipbuilding supplies, the Saudi Press Agency reported.

These efforts are part of Saudi Arabia’s broader strategy to bolster industrialization and diversify the economy away from crude oil dependence. The National Industrial Strategy aims to attract investment, encourage economic expansion, and enhance the gross domestic product and non-oil exports. 

In Madrid, Alkhorayef met with officials from several companies including Drone Hopper, a Spanish start-up known for developing multi-rotor unmanned drones; Ferroglobe, a silicon metal supplier; and Reinosa Forgings & Castings, which manufactures large forgings and moldings. 

He also engaged with representatives from IDIADA, a firm specializing in design, engineering, testing, and homologation services for the automotive industry, and Xcalibur, which provides airborne geophysical surveys. 

Alkhorayef held discussions with Ana Maria Alonso-Zarza, director of the Spanish Geological and Mining Institute, to explore opportunities in geological research and the acquisition of high-resolution technical data for various scientific and industrial applications. 

Alkhorayef also met with Spain’s Industry and Tourism Minister Jordi Hereu and Economy, Trade, and Business Minister Carlos Cuerpo to discuss enhancing economic relations and increasing Spanish investment in the Kingdom. 

He outlined Saudi Arabia’s Vision 2030 goals aimed at economic diversification and noted that the Kingdom is providing funding to attract foreign investment in the industrial and mining sectors. 

Additionally, Alkhorayef met with Spanish Minister of State for Energy Sara Aagesen Munoz to discuss strengthening mining cooperation between the two nations. He emphasized that sectors such as industry, mining, energy, and logistics are critical to achieving Vision 2030 objectives, with mining playing a vital role in the Kingdom’s economic transformation. 

Last week, Alkhorayef met with Italy’s Minister of Environment and Energy Security Gilberto Pichetto Fratin to discuss the significance of collaborative development and strategic partnerships across various sectors, primarily mining. 

Alkhorayef also met with members of the Saudi-Spanish Business Council to discuss ways to support and strengthen economic ties between the two countries.

These discussions highlight Saudi Arabia’s commitment to fostering international collaborations that align with its economic goals, further solidifying its position as a key player in the global industrial landscape.


Corporate activities drive Saudi bank loans to highest growth rate in 18 months

Corporate activities drive Saudi bank loans to highest growth rate in 18 months
Updated 20 October 2024
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Corporate activities drive Saudi bank loans to highest growth rate in 18 months

Corporate activities drive Saudi bank loans to highest growth rate in 18 months
  • Corporate lending dominated the sector, making up around 54 percent

RIYADH: Saudi bank loans reached SR2.82 trillion ($753.27 billion) in August, representing an annual growth rate of 12.11 percent — the highest in 18 months, according to recent data.

Figures from the Saudi Central Bank, also known as SAMA, showed that corporate lending dominated the sector, making up around 54 percent, with individual loans comprising the remaining figure.

The former category grew by 16 percent, outpacing the 7.56 percent growth in personal loans, underscoring the increasing demand for business financing across key sectors.

Real estate activities led corporate lending, accounting for 20.1 percent of all business loans and growing by 26.37 percent to reach SR303.48 billion.

The wholesale and retail trade sector followed, constituting 13.3 percent of these loans, with SR201.3 billion in financing. Lending to manufacturing came third, making up 11.8 percent, totaling SR179.1 billion.

Loans to the electricity, gas, and water supply sectors accounted for 11.1 percent of total lending, amounting to SR167.66 billion. This category experienced a growth rate of 26.2 percent, nearly matching that of the real estate sector.

While professional, scientific, and technical activities represented a small portion of total corporate loans at just 0.6 percent, they posted the highest annual growth rate of 58.83 percent, amounting to SR8.45 billion.

Corporate lending in Saudi Arabia, particularly in the real estate sector, has seen significant growth, driven by the Kingdom’s focus on large-scale projects aligned with Vision 2030.

The government’s ongoing commitment to giga-projects such as NEOM, Qiddiya, and the Red Sea Development, alongside sustained public investment in infrastructure, has created heightened demand for financing.

This surge in real estate activities, coupled with solid non-oil GDP growth, reflects a vibrant operating environment for banks, as businesses increasingly seek funding to participate in these transformative developments.

In a July report, Fitch Ratings projected that Saudi banks will continue to grow at nearly twice the rate of the GCC average, with financing growth for 2024 expected around 12 percent.

The report also indicated that banks are likely to increase their focus on corporate financing, which is anticipated to account for approximately 60 percent of new loan originations in 2024.

Lending growth in Saudi Arabia’s electricity, gas, and water supply sector is fueled by several key factors, with one significant driver being government investment.

The Kingdom prioritizes infrastructure development through its Vision 2030 strategy, resulting in substantial financing for renewable energy projects and utility enhancements.

Furthermore, a strong focus on sustainability initiatives encourages funding for projects centered on renewable energy sources such as solar and wind, facilitating the transition to a more sustainable landscape.

Population growth and urbanization further fuel demand for expanded utility services. The increasing need for electricity, gas, and water in urban areas necessitates substantial investments, prompting utilities to seek financing for infrastructure upgrades.

Moreover, regulatory support from the government enhances the lending environment through policies that encourage efficiency and reliability in utilities, making banks more inclined to finance projects in this sector.

As the Saudi economy diversifies away from oil dependency, investments in utility infrastructure are essential to support industrial and commercial activities, creating additional demand for financing.

Additionally, technological advancements in energy production, distribution, and water management encourage utilities to invest in innovative solutions, prompting financial institutions to fund projects that incorporate cutting-edge technologies.

Saudi banks robust financing growth has intensified competition for liquidity, particularly in the context of a high-interest-rate environment that has mirrored increases set by the US Federal Reserve over the past 2 years.

As interest rates rise, there has been a notable influx of savings deposits, particularly from government-related entities. While this trend underscores the growing financial strength of these entities, it also poses challenges for banks, as GRE deposits are often more expensive compared to traditional savings and current accounts.

In this competitive landscape, the reliance on these higher-cost deposits can squeeze profit margins. However, despite these challenges, Fitch Ratings estimates that Saudi banks will maintain a stable average net financing margin of approximately 3.2 percent, as seen from 2022 to the first quarter of 2024.

This resilience reflects the banks’ effective management of funding costs, allowing them to navigate the shifting deposit landscape while still capitalizing on the opportunities presented by the strong financing growth within the kingdom.

In September, Saudi Arabia reduced its benchmark interest rate from 6 percent to 5.5 percent, following a 50-basis-point cut by the central bank, aligning with a similar move by the Federal Reserve.

The decrease is expected to further stimulate Saudi Arabia’s non-oil sectors, particularly construction and services, by making credit cheaper and enhancing domestic spending.

Analysts believe this monetary easing could support Vision 2030, driving investment in infrastructure and innovation while potentially benefiting the real estate market.


RCU showcases environmental, social, and economic milestones in 1st annual sustainability report

RCU showcases environmental, social, and economic milestones in 1st annual sustainability report
Updated 20 October 2024
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RCU showcases environmental, social, and economic milestones in 1st annual sustainability report

RCU showcases environmental, social, and economic milestones in 1st annual sustainability report
  • The report highlighted the successes of RCU’s journey and its commitment to responsible development

RIYADH: The Royal Commission for AlUla has unveiled its first Annual Sustainability Report, marking a milestone in the commission’s ongoing efforts to transform the region into a global destination for cultural, social, environmental, and economic sustainability.

The report highlighted the successes of RCU’s journey and its commitment to responsible development aligned with national and global sustainability frameworks, including the Saudi Green Initiative, Vision 2030, as well as UN goals.

According to RCU’s Governor Prince Badr bin Abdullah bin Farhan – who also serves as the Kingdom’s Minister of Culture – the commission is on an “ambitious journey to achieve the goals of the AlUla Vision, emanating from the spirit of Saudi Vision 2030.”

He added: “Our first Sustainability Report is a testament to our commitment to sustainability. It showcases our ambitions, goals, and activities in this field for our generation and the ones to come.”

Key achievements: Sustainability in action

The report highlighted RCU’s transformative achievements, notably raising AlUla’s Heritage Sustainability Index to 75 percent, surpassing its initial target of 63 percent.

Visitor satisfaction across the heritage sites reached 96 percent, reflecting the commission’s focus on delivering exceptional experiences while maintaining the integrity of AlUla’s cultural and historical landmarks.

RCU has also made considerable strides in social and educational development. Over the past year, the commission has provided 747 university scholarships to local students, enabling them to study in 117 international institutions.

This initiative is part of RCU’s broader goal of investing in the local community and empowering the next generation.

These educational efforts align with the commission’s vision to enhance the natural and social potential of our people and place, ensuring a sustainable future for the many aspects of life in AlUla, as noted by Abeer Al-Akel, acting CEO of RCU.

Community satisfaction also stands at 90 percent, reflecting the success of initiatives such as the Hammayah Programme, which has trained 1,400 local leaders and generated 2,500 employment opportunities.

Economic growth and job creation

Economic sustainability remains central to RCU’s long-term vision. By the end of 2023, the commission had created over 6,000 jobs in tourism-related sectors, with 1,500 jobs directly in the industry.

In addition, RCU’s Vibes AlUla initiative, which supports local entrepreneurs, led to the establishment of 336 new micro, small, and medium-sized enterprises and created 198 new local job opportunities.

The report emphasized RCU’s continued focus on sustainable economic development through partnerships with both local and international stakeholders.

As Al-Akel highlighted: “By promoting sustainable livelihoods, supporting local businesses and employment, and driving economic diversification, we aim to build a resilient and thriving economy in line with the objectives of Vision 2030.”

Green and climate-neutral initiatives

Aligned with Vision 2030 and the Saudi Green Initiative, RCU is pursuing a climate-neutral future, with a target to achieve carbon neutrality by 2035.

In 2023, the commission made significant strides in this direction through a number of innovative environmental projects.

These include planting over 111,000 trees in protected areas, converting agricultural waste into fertilizer, and expanding water distribution networks to achieve 95 percent coverage for AlUla’s population.

Another achievement from the report is the commission’s focus on green mobility. RCU has partnered with Lucid Motors to introduce electric vehicles to the region, including a fleet of 30 EVs and the installation of 10 charging stations across AlUla.

These efforts aim to reduce carbon emissions and provide sustainable transportation solutions for both residents and visitors.

As part of its nature conservation efforts, RCU has reintroduced several native species to the AlUla ecosystem. The report noted that 108 Arabian gazelles, 385 Sand gazelles, 328 Arabian oryxes, and 59 Nubian ibexes were released into the wild, contributing to biodiversity and the overall health of the local environment.

RCU’s Arabian Leopard Conservation Breeding Programme, which saw the birth of seven new cubs, also continued to play a pivotal role in protecting the critically endangered species.

Global partnerships: A collaborative approach to sustainability

One of the key strengths of RCU’s approach is its collaboration with world-leading organizations.

The report underscored RCU’s partnerships with UNESCO, the International Union for Conservation of Nature, and King Abdullah University of Science and Technology to promote conservation and sustainability.

These partnerships helped in the development of innovative solutions that enhance sustainability across all dimensions – environmental, social, cultural, and economic.

Prince Badr emphasized the importance of these collaborations, noting in the report: “Innovative solutions were adopted and important local, regional and international partnerships were forged with organizations.”

The collaborations included UNESCO for the protection of cultural heritage, IUCN for the promotion of comprehensive regeneration, and Red Sea Global in the areas of sustainability and environmental initiatives.

There were also partnerships with Space for Giants for the protection of biodiversity, Artefact for driving artificial intelligence and data transformation, and Thales Group.

With the release of this annual sustainability report, the commission is aiming to continue building on its sustainability successes as it transforms AlUla into a model of sustainable development for the Kingdom and the world.

In the report, Al-Akel underscored RCU’s role as a leader in the field, saying: “By protecting the cultural heritage from our past, and enhancing the natural and social potential of our people and place, we ensure a sustainable future for the many aspects of life in AlUla.”