Economic Research

In-depth reports on key economic issues.

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    Wed, 29 June 2016

    Temporary Outages Helping Balance Oil Markets

    Brent oil prices surged to an average of $45 per barrel (pb) in Q2 2016, up 35 percent quarter-on-quarter, due to a combination of developments. Firstly, oil outages from Canada and Nigeria resulted in at least 1.5 mbpd being temporarily unavailable to global oil markets. Secondly, slowing US shale oil output resulted in year-on-year growth in US crude oil imports being consistently positive for the first time in six years. ‘Brexit’ had a relatively modest impact on oil markets, with Brent slipping back slightly below $50pb immediately following the UK’s decision to leave the European Union. The effects over the longer term are less clear, with a worse-case scenario being a global contagion effect resulting in increased volatility in global oil and financial markets. 

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    Tue, 21 June 2016

    Recovery in Oil Prices: Rebound in US Shale Oil?

    During Q1 2016, US oil production saw its first year-on-year decline in eight years and this decline is expected to continue throughout the remainder of 2016. Despite this, the recently observed uptick in oil prices presents shale oil companies with a potential life-line. Not only does it raise the possibility of hedges being taken out again, an increasing number of shale oil companies are restructuring under chapter 11 bankruptcies, thereby prolonging oil production. Concurrently, the number of drilled uncompleted wells (DUCs), all of which can be brought on-line relatively quickly, have risen in recent months. All of these developments mean that even as current oil and financial indicators point to declining production in the next two years, production could turn out to be better than expected.

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    Thu, 16 June 2016

    National Transfer Plan (NTP) 2020: The Kingdom's Path to Sustainable Economic Development

    The Council of Ministers approved the Kingdom’s National Transformation Program (NTP 2020) on June 6th 2016, with it ushering in a major new policy era designed to overhaul the economy. The program branches out directly from the Vision 2030 announcement back in April, and includes major overhauls to the economy. In this report, we attempt to assess the most relevant economic initiatives specified within the NTP, and try to present the likely trends and potential impact on the economy. We have also revised some of our macroeconomic forecast for 2016 and 2017, including our oil, fiscal, external, and GDP outlook.

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    Thu, 05 May 2016

    Saudi Vision 2030: Placing the Kingdom on a prosperous path

    The Council of Ministers recently approved a major and ambitious new Vision for the Kingdom. In this report, we attempt to illustrate the main economic reasons behind having this new Vision by focusing on the “thriving economy” theme. We also highlight the main economic and financial targets as well as the transformative and executive programs specified within this Vision. 

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    Wed, 13 April 2016

    Quarterly Oil Market Update (Q1-2016): Production "freezes" not a big deal

     Lower yearly oil prices are taking their toll on shale oil producers, with Q1 2016 seeing the first year-on-year fall in US production in eight years, but record rises in OPEC and Russian crude production have more than compensated for this drop.  Oil prices have shown some firmness in the run-up to the production ‘freeze’ meeting between a number of oil producing countries next week. In our view, there are significant risks to either an agreement being reached or a lack of implementation even if there is an agreement. In both instances we would expect the gains of the previous month or so to be lost. As such we maintain our full year 2016 Brent forecast at $33 pb with prices increasing to $44 pb in 2017. 

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