OPEC forecasts demand to grow by 2.11 million bpd this year from 2.25 million bpd previously
Oil was steady after the report was released, trading above $80 a barrel
Updated 12 August 2024
Reuters
LONDON: OPEC on Monday cut its forecast for global oil demand growth in 2024 citing softer expectations for China, a reduction that highlights the dilemma faced by the wider OPEC+ group in raising production from October.
This is the first cut in OPEC’s 2024 forecast since it was made in July 2023, and comes after mounting signs that demand in China has lagged expectations due to slumping diesel consumption and as a crisis in the property sector hampers the economy.
In a monthly report on Monday, the Organization of the Petroleum Exporting Countries said world oil demand will rise by 2.11 million barrels per day in 2024, down from growth of 2.25 million bpd expected last month.
There is a wide split in 2024 demand growth forecasts due to differences over China and the pace of the world’s transition to cleaner fuels. OPEC is still at the top of industry estimates and has a long way to go to match the International Energy Agency’s far lower view.
The world oil demand growth forecast for 2024 is revised down slightly by 135 tb/d from the previous month’s assessment. It now stands at a healthy 2.1 mb/d, well above the historical average of 1.4 mb/d seen prior to the COVID-19 pandemic.
“This slight revision reflects actual data received for the first quarter of 2024 and in some cases for the second quarter, as well as softening expectations for China’s oil demand growth in 2024,” OPEC said in the report.
OPEC said this year’s demand growth was still above the historical average of 1.4 million bpd seen prior to the COVID-19 pandemic in 2019, which caused a plunge in oil use, and that summer travel demand would remain robust.
“Despite the slow start to the summer driving season compared to the previous year, transport fuel demand is expected to remain solid due to healthy road and air mobility.”
In the report, OPEC also cut next year’s demand growth estimate to 1.78 million bpd from 1.85 million bpd previously, also at the top end of what the industry expects.
Oil last week touched the lowest price this year near $75 a barrel on concerns about Chinese demand and a possible US recession. Prices were steady after the report was released, trading above $80.
JULY PRODUCTION UP
OPEC+, which groups OPEC and allies such as Russia, has implemented a series of output cuts since late 2022 to support the market, most of which are in place until the end of 2025.
On Aug. 1, OPEC+ confirmed a plan to start unwinding the most recent layer of cuts of 2.2 million bpd from October, with the caveat that it could be paused or reversed if needed.
The group still has a month to decide whether to start releasing the oil from October, and will study oil market data in the coming weeks, a source close to OPEC+ said last week.
OPEC’s report showed that actual production is increasing nonetheless, with OPEC+ pumping 40.9 million bpd in July, up 117,000 bpd from June, led by an increase from Saudi Arabia.
The OPEC report projects demand for OPEC+ crude, or crude from OPEC plus the allied countries working with it, at 43.8 million bpd in the fourth quarter, in theory allowing room for higher production by the group.
Still, other forecasts give less room. The IEA, which represents industrialized countries, sees much lower demand growth than OPEC of 970,000 bpd in 2024. The IEA is scheduled to update its figures on Tuesday.
Franchises boosting Saudi economy, as Kingdom dominates half of MENA’s $30bn market
Updated 07 March 2025
MOHAMMED AL-KINANI
JEDDAH: Franchises are proving increasingly vital to Saudi Arabia’s economic development, driving employment, government revenue, and cultural transformation in a youthful nation.
Economic experts have told Arab News that the introduction of a law in 2019, followed by expansion of regulations the following year, helped open the Kingdom up to international businesses, as well as strengthened the relationship between franchisors and franchisees.
These moves, together with the economic expansion of Saudi Arabia as part of the Vision 2030 initiative, means the Kingdom now accounts for nearly half of the $30 billion franchise market in the Middle East and Africa, according to Yaseen Ghulam, associate professor of economics at Riyadh-based Al-Yamamah University.
He told Arab News there is consensus among researchers and industry observers that franchise businesses are expected to grow by more than 20 percent per annum for the coming five years and beyond.
“This presents an exceptional opportunity for international brands to enter the Kingdom through franchising, given the fact that European and North American consumer markets are struggling due to economic uncertainty, unemployment, and higher cost of living,” Ghulam said.
He added that franchise registrations in the Kingdom stood at 1,788 by the end of the third quarter of 2024, up from just 185 three years earlier.
With 1,232 entries, the accommodation and food services sector — which includes lodging facilities, dining establishments, and enterprises associated with tourism — led the registrations, the associate professor said.
Yaseen Ghulam, associate professor of economics and director of research at the Riyadh-based Al-Yamamah University. Supplied
He added that the wholesale and retail division came in second with 689, and the transport and storage sector with 257. An important element of this development, he noted, is more widespread activity, covering almost all major cities, rather than clustered around one particular region or sector.
“With 647 franchise registrations, Riyadh has led the field, followed by Makkah with 363, and the Eastern Province with 225. According to some estimates, over 1,200 brands are available for franchising, and the franchising sector in Saudi Arabia is offering over 10,000 business opportunities.”
Ghulam noted that more than 600 international and 380 local franchise brands are present in the Kingdom, according to the Small and Medium Enterprises General Authority, known as Monsha’at.
Abdullah Al-Maghlouth, a member of the Saudi Economic Association, told Arab News that government support for SMEs through streamlined processes and a business-friendly environment has helped drive the franchise sector.
He added that the 2019 law bolstered the Kingdom’s business ecosystem, attracting local and international investments through a clear legal framework.
“The 2020 executive regulations complement this by providing a comprehensive legal environment that facilitates franchise operations and ensures guarantees for all parties involved. This enhances transparency between franchisors and franchisees, making the Saudi market increasingly appealing to investors,” Al-Maghlouth said.
Reflecting on the key factors driving growth in the sector in the Kingdom, Ghulam said Monsha’at’s Franchise Center is “aggressively advancing entrepreneurship” through different programs, such as Tomoh.
He added that trademarks are now fully protected thanks to the Kingdom’s recent successful implementation of an intellectual property rights plan, with online portals making trademark registration and protection simple and accessible.
Financial guarantees provided by the Kafalah program are also proving to be a factor in sourcing finance from local investors, Ghulam said, and he noted that the Social Development Bank has played a significant role in advancing franchising in the Kingdom.
The institution provides financing solutions ranging from SR150,000 ($40,000) to SR4 million with a maximum financing length of 8 years as part of its program to assist new franchise developments and expansion.
“Another significant step in bolstering the franchise community is the founding of the Saudi Franchise Association, the Kingdom’s first specialized association. It has worked to promote the idea and culture of business excellence since its foundation. Additionally, it has organized numerous seminars and workshops and signed various partnerships with colleges and chambers of commerce,” said Ghulam.
Arrangements are also in place in Saudi Arabia to support franchise business and provide consulting. For both domestic and international businesses, Arab Franchise Marketing Corporation provides media platforms, administrative and legal services, and new franchise opportunities. “Through useful solutions, they work with a profit system to grow the franchise market in the MENA area, especially in Saudi Arabia,” said the associate professor.
Highlighting how Saudi Vision 2030 has influenced the development of the franchise market, Ghulam said that the objectives of Saudi Arabia’s Vision 2030 are to invest in globally competitive industries, diversify the country’s economy, boost the private sector, and create jobs.
“Following this, one important economic area that is highlighted in Vision 2030 is franchising. For the success of the Vision, a comprehensive legal, regulatory, financial, and economic set up was needed and has been established for the promotion of the private sector to diversify the economy and reduce dependence on the oil sector,” he said.
The development, he added, of the basic and changed framework has indeed helped the private sector grow in the last few years.
Ghulam said that the franchising industry has greatly benefited from Vision 2030, with support mechanisms, new institutions, and financial aid serving as key enablers.
He added that investment in mega projects, sports events, and facilities has created youth employment, raised real wages, and driven demand for sectors like education, health, dining, beauty, and fitness.
This has attracted international franchisors and local investors, fueling significant growth in the sector.
Ghulam emphasized that Vision 2030 has also shifted the mindset of Saudi youth, encouraging private sector roles and self-employment through franchising, offering substantial returns on investment.
He advised foreign brands seeking to expand into the Saudi franchise market that there is significant potential in sectors such as food, retail, and education, as well as health, fitness, and sports.
“More specifically, customers are quite fond of education franchises, including both domestic and international franchises that focus on training, early childhood care, development centers, and tutoring,” Ghulam said.
He continued that Saudi Arabia’s focus on health-related industries has driven high demand for gyms, nutritious food franchises, and medical services, adding that loosened social regulations, particularly for women, and government support for regional designers have boosted the retail sector, particularly fashion.
Al-Maghlouth agreed that beyond traditional sectors like tourism, hospitality, and food, the Saudi franchise market will continue to expand into emerging fields such as technology, education, and healthcare.
“The supportive legal framework will continue to enhance market transparency and drive growth in economic activities, fostering a sustainable investment environment. This will not only benefit all stakeholders but also solidify Saudi Arabia’s position as a leading investment destination in the region.” he said.
Saudi multi-billion-dollar corporations are driving strategic investments in startup ecosystem
Kingdom’s corporations aligning with Vision 2030, say experts
Aramco Ventures, stc’s tali ventures exemplify dual approach
Updated 07 March 2025
Nour El-Shaeri
RIYADH: Saudi Arabia’s corporate venture capital arms are playing a pivotal role in driving innovation and advancing economic diversification by aligning their investment strategies with both national and corporate objectives.
Between 2020 and the third quarter of 2024, corporate investors accounted for 27 percent of the 1,361 unique investors in the Middle East and North Africa region, deploying approximately $380 million, according to a report by MAGNiTT.
Saudi Arabia saw the highest ratio, with CVC’s making up 30 percent of local unique investors.
Funds such as Aramco Ventures and stc’s tali ventures exemplify this dual-purpose approach. By leveraging their resources and expertise, these CVCs are fostering startups that align with the Kingdom’s Vision 2030 agenda while simultaneously advancing the strategic and operational goals of their parent companies.
According to Stephane Ulcakar, associate director and head of corporate and government financial services at Arthur D. Little, these funds stand out due to their scale and strategic scope.
“Aramco Ventures recently secured an additional $4 billion in funding, raising its total capital to $7 billion,” Ulcakar noted in an interview with Arab News, adding that stc has also collaborated with global players like SoftBank and the Saudi Public Investment Fund to broaden its reach.
This alignment extends to specific investment sectors. In an interview with Arab News, Arjun Singh, partner and global head of fintech at ADL, explained: “These arms — and their affiliated funds — are not just looking for the next big thing but also for startups that can integrate seamlessly into their parent companies’ operations.”
Stc’s tali ventures prioritizes fintech, artificial intelligence, and blockchain, reflecting both the nation’s and its parent company’s ambitions to champion Saudi Arabia’s digital economy.
stc Group, tali ventures, and Cohere announced a strategic collaboration in February. File
Similarly, Aramco’s Wa’ed Ventures focuses on startups that advance the Kingdom’s digital transformation while complementing Aramco’s strategic objectives.
Beyond funding, Saudi CVCs bring a distinct set of advantages to startups by leveraging industry expertise, supply chain networks, and expansive ecosystems.
Ulcakar highlighted the role of national initiatives such as the PIF’s National Development Strategy in addressing supply chain gaps and reshaping logistics.
Startups backed by these CVCs gain access to infrastructure and pilot programs within large ecosystems, which help refine their offerings.
“Certain well-known national players have partnered with startups to integrate advanced technologies into their supply chain operations, testing solutions like automation and predictive analytics,” Ulcakar stated.
Singh emphasized how this approach accelerates innovation, particularly in regulated industries like fintech and healthcare.
“Startups backed by corporate investors show stronger performance, as these partnerships can significantly accelerate regulatory approval processes and market entry,” he said.
Saudi National Bank’s venture capital arm is an example of an organization enabling fintech startups to scale efficiently by offering regulatory navigation support and access to a large customer base, he added.
“The Saudi VC market is undoubtedly burgeoning, with abundant demand for bankable capital and distinct funding and technical advantages brought by various players on the supply side,” Ulcakar said.
The market’s maturation is evident, with funding reaching $987 million in 2022, and CVCs accounting for 32 percent of all deals — a significant rise from less than 15 percent in 2018.
This growth is not limited to Aramco and stc — banks including SNB Capital, Riyad Bank and SAB are emerging as key players, further diversifying the funding landscape.
Additionally, Saudi Venture Capital continues to act as a catalyst for the ecosystem, having deployed over SR3.4 billion ($905.7 million) through direct and indirect investments.
This has propelled Saudi Arabia to capture the highest share of total VC funding in the MENA region, reaching 54 percent in the first half of 2024, up from 38 percent during the same period in 2023.
The Kingdom’s VC ecosystem is marked by a collaborative dynamic between corporate and traditional VCs.
Singh highlighted that “87 percent of CVC-backed deals in 2022-23 included traditional VC participation.”
This high rate of co-investment reflects a complementary relationship, where both types of investors contribute to building a more sophisticated, institutionalized ecosystem.
Singh noted that this coordinated evolution spans multiple sectors and is essential to creating a sustainable innovation landscape aligned with Saudi Arabia’s Vision 2030.
Looking ahead, the key question is how this ecosystem will consolidate further, potentially positioning the Kingdom as a global private capital hub.
“The diversity of approaches — from direct CVC arms to partnerships with established VC firms — demonstrates the market’s growing maturity and suggests a sustainable growth trajectory,” Ulcakar stated.
This progress is a critical component of the Kingdom’s strategy to establish itself as a leader in technology and innovation.
In sectors such as energy and logistics, Saudi Arabia’s CVCs are playing a pivotal role in driving innovation.
Ulcakar explained that the Kingdom is leveraging its global footprint to balance present needs with future aspirations.
Investments in fossil fuel infrastructure, for example, are complemented by efforts to localize electric vehicle technologies and pioneer nuclear fusion projects. These investments often blend incremental improvements with disruptive technologies, creating a dual pathway for transformation.
CVC arms are distinctive in their dual mandate to achieve financial returns while pursuing strategic objectives for their parent companies.
This dual focus shapes their investment and risk management philosophies, setting them apart from independent venture capital firms.
Singh said: “Unlike traditional VCs, which prioritize financial exits and short-term gains, Saudi CVCs often adopt a longer-term, patient capital strategy.”
This approach allows them to align their investments with their parent companies’ strategic goals, even if such opportunities involve higher initial risks or extended timelines.
For instance, Aramco Ventures invests in clean energy and carbon capture technologies, aligning with the parent company’s energy transition and sustainability goals.
These investments represent long-term bets with strategic implications, demonstrating a willingness to prioritize alignment with corporate objectives over immediate financial returns.
Similarly, tali ventures focuses on digital innovation while reinforcing stc’s leadership in telecommunications and digital services.
By investing in startups, tali ventures not only targets financial returns but also strengthens stc’s digital payments ecosystem, creating synergies that benefit the parent company’s broader ambitions.
Singh highlighted this dual approach as a key differentiator, noting that these capabilities enable Saudi Arabia CVCs to pursue opportunities that might otherwise be deemed too risky by independent VCs.
Ulcakar emphasized the nuanced nature of this approach. “The ability to generate both financial and strategic returns represents a unique advantage and a complex challenge in this growth market. There is no one-size-fits-all answer,” he said.
Ulcakar also noted that Saudi Arabia is one of the few growth markets that has successfully financed its own development, with investor preferences gradually evolving.
“We observe a gradual shift toward prioritizing financial returns over strategic ones, aligning with the Kingdom’s evolving investment goals,” he added.
Oil Updates — crude set for biggest weekly drop since Oct on tariff uncertainty, supply gains
US tariff suspension for Mexico, Canada provides temporary reprieve
But trade war risks and OPEC+ supply increase weigh on market
Updated 07 March 2025
Reuters
NEW DELHI: Oil prices were little changed on Friday but were set for their biggest weekly decline since October as the uncertainty around US tariff policy is creating concerns about demand growth at the same time major producers are set to increase output.
Brent futures rose 17 cents, or 0.24 percent, to $69.63 a barrel by 6:15 a.m. Saudi time. US West Texas Intermediate futures rose 12 cents, or 0.18 percent, to $66.48 a barrel.
However, for the week Brent is down 4.9 percent, set for its biggest weekly decline since the week of Oct. 14. WTI is set to drop 4.8 percent, also its biggest weekly fall since that week.
Markets, including oil, have been whipsawed by fluctuating trade policy in the US, the world’s biggest oil consumer.
“It looks like the financial markets are in full panic mode, no longer easily pacified by Trump’s one-month postponements and exemptions on import tariffs,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
“That leaves crude stuck around four-month lows, albeit vulnerable to further slides,” she added.
On Thursday, US President Donald Trump suspended the 25 percent tariffs he had imposed on most goods from Canada and Mexico until April 2, although steel and aluminum tariffs would still go into effect on March 12 as scheduled.
The amended order does not fully cover Canadian energy products, which are under a separate 10 percent levy.
The tariffs themselves are considered a drag on economic growth and therefore oil demand growth. But the uncertainty over the policy is also slowing business decisions, which is also impacting the economy.
“The risks to oil prices remain tilted to the downside with new supply from OPEC+ and non-OPEC producers expected to push the market well into an oversupply,” Fitch’s research unit, BMI, said in a note.
Brent prices on Wednesday fell to their lowest since December 2021 after US crude inventories rose and in the wake of the decision by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to increase their output quotas.
The group said on Monday that it had decided to proceed with a planned April output increase, adding 138,000 barrels per day to the market.
Some of the downward momentum in prices has eased as the US is looking at steps to halt exports from key OPEC producer Iran.
“We are going to shut down Iran’s oil sector and drone manufacturing capabilities,” US Treasury Secretary Scott Bessent said in his first major speech to Wall Street executives.
Reuters reported on Thursday that Trump is considering a plan to inspect Iranian oil tankers at sea using an accord aimed at weapons of mass destruction, according to sources, part of the US president’s “maximum pressure” to drive Iranian oil exports down to zero.
In speech to Congress, Trump reassures investors that new visa scheme would not tax foreign assets
Taxing foreign assets was a concern despite big enthusiasm for new scheme, pundits had told Arab News
“This move certainly removes a significant barrier for Saudi and Gulf investors who were previously wary of US residency due to FATCA’s global tax implications,” Al-Ansari tells Arab News.
Updated 07 March 2025
Miguel Hadchity
RIYADH: President Donald Trump assured that investors entering the US under the newly introduced $5 million “Gold Card” visa program will not be subject to taxes on their foreign assets.
This assurance comes as Trump and his administration seek to attract high-net-worth individuals from around the world by offering a direct pathway to US residency and citizenship.
Addressing Congress on March 4, Trump outlined the program’s structure. “They (investors) won’t have to pay tax from where they came, the money that they’ve made, you wouldn’t want to do that. But they have to pay tax (in the US) and create jobs,” he said.
His remarks came as a reassurance to prospective investors who may have been concerned about the Foreign Account Tax Compliance Act, which has deterred some wealthy individuals from seeking US residency due to global taxation concerns.
Now that the president has cleared that doubt and reassured investors that their assets abroad won’t be taxed, Salman Al-Ansari, a geopolitical analyst and former US investor, emphasized that the Gold Card exemption is a game-changer.
“This move certainly removes a significant barrier for Saudi and Gulf investors who were previously wary of US residency due to FATCA’s global tax implications,” he told Arab News in an interview.
Al-Ansari added that this exemption “is a clear indication that his administration is responsive to global investor concerns.”
Salman Al-Ansari. Supplied
However, he noted that despite this strong incentive, long-term concerns about possible changes in US tax policy are likely to remain. “Investors in the region understand that tax policies can change with different administrations, so some may still approach with caution, opting for structures that offer flexibility in case future regulations become less favorable,” Al-Ansari added.
The new initiative will replace the existing EB-5 visa program, which was originally designed to grant permanent residency to investors who contributed at least $1 million to a US business that created or sustained at least 10 jobs for American workers.
Trump emphasized to Congress that the initiative would address talent retention by allowing investors to fund and support highly skilled graduates from top US universities, preventing them from being forced to leave the country.
The US faces stiff competition from other nations with established golden visa programs, particularly Gulf nations like Saudi Arabia, which have successfully attracted high-net-worth individuals through similar initiatives.
On whether Saudi investors will become more selective about US investments due to domestic taxation under the Gold Card visa, Al-Ansari noted: “The exemption of foreign assets is a strong incentive, but the fact that income generated within the US is still taxable means that Saudi investors will likely be more strategic in their choices.”
He added: “They may favor sectors that offer higher tax efficiencies, such as real estate, energy, or industries benefiting from tax incentives.”
However, Al-Ansari said that as long as the US provides a stable business environment and competitive opportunities, taxation within the country is a reasonable tradeoff.
“The key factor for Saudi investors will be the ease of doing business and whether the Gold Card visa comes with additional facilitations that make investments more attractive beyond the tax benefits,” he concluded.
By structuring the Gold Card visa to exempt foreign assets from US taxation, Trump’s administration is positioning the program as an attractive alternative to other golden visa schemes worldwide.
Investors from the Gulf, who have already benefited from similar residency programs in their home countries, may now see the US as an increasingly viable destination for expanding their businesses and securing long-term financial stability.
As highlighted in a previous report by Arab News, the initiative is being closely watched due to its potential to attract substantial foreign capital, especially from countries like Saudi Arabia, the UAE, and Qatar.
Despite global competition from established golden visa programs, the US remains an appealing destination for investors, due to its business environment, talent pool, and real estate opportunities.
With the added benefit of no taxation on foreign assets, the Gold Card program is seen as a highly attractive option for investors looking to expand their businesses and secure long-term financial stability in the US.
Direct flights from Stuttgart to Jeddah to begin later this year
Updated 06 March 2025
REEM WALID
RIYADH: Direct flights from Stuttgart, Germany, to Jeddah, will begin in the second half of 2025 and operate twice a week, the Saudi Air Connectivity Program has announced.
Inaugurated in collaboration with the Saudi Tourism Authority and Jeddah Airports Co., the route is set to utilize an A321neo aircraft with a capacity of 224 seats, according to the Kingdom’s press agency.
This move aims to increase the capacity of travelers and visitors from Europe to Saudi Arabia, aligning with the government’s aviation goal of transporting 330 million passengers across over 250 destinations, as well as 4.5 million tonnes of air cargo, by 2030.
Majid Khan, CEO of ACP, said the collaboration with German low-cost carrier Eurowings — a wholly owned subsidiary of the Lufthansa Group — is advancing well in enhancing air connections between Saudi Arabia and Europe.
He further expressed confidence in forming a long-term partnership with the airline to broaden the network of flight routes in the future, offering travelers new opportunities to experience the Kingdom’s historical and cultural sites.
This falls in line with ACP’s goal to boost tourism in Saudi Arabia by enhancing air connectivity between the Kingdom and international destinations, broadening existing flight routes, and establishing connections to new global markets.
As the driving force behind the National Tourism Strategy and Saudi aviation strategy, ACP promotes collaboration and partnerships between crucial public and private sector players in the tourism and aviation sectors. Its objective is to enhance the Kingdom’s status as a premier global hub for air travel connectivity.
