Thematic

An examination of the latest developments in the Saudi economy and stock market, and the global oil market.

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    Mon, 08 December 2014

    Oil market dynamics and Saudi fiscal challenges

    The recent OPEC’s decision not to cut output adds further uncertainty not only on the global oil market, but also on the outlook for the Kingdom’s fiscal policy. In this report we examine the global environment that led to such decision. We note that while such decision along with other variables in the market would result in different price levels over the next two years, prices of $85 and 83 per barrel for 2015 and 2016, respectively,  are most likely. These lower prices will have a direct impact on the balance of payments and fiscal position of the Kingdom. In this report, we examine a number of fiscal policy reactions to different budgetary outcomes and implication of each on the non-oil economy.

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    Tue, 18 November 2014

    Outlook for crude oil refining- focus on the Saudi refining sector in global context

    Saudi Arabia will see 1.2 million barrels per day (mbpd) of new refining capacity come online by 2020. This includes the Satorp refinery, which is already up and running, and the Yasref refinery, which will start up in Q4 2014. This major investment in downstream sector by the Kingdom coincides with a huge growth in modern refineries in countries such as India and China, which will add around 7 mbpd of highly complex capacity globally by the end of the decade. The purpose of this report is to highlight the key trends in the international refining sector and to analyze the impact of these developments on the Saudi refining sector.

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    Tue, 17 December 2013

    The outlook for unconventional oil and gas production- Focus on tight oil and shale gas and it's impact on Saudi Arabia

    Over the last few years, the rapid increase of tight oil and shale gas production in the US has brought about a significant change to the global energy landscape. Following our publication on “Saudi Arabia’s coming oil and fiscal challenge” in July 2011, we decided to update our view on how this transformation in the energy sector could impact the Kingdom’s future standing in the world’s energy markets. By reviewing many of specialized public domain industry information, we conclude that tight oil production should not significantly affect Saudi Arabia’s situation and that shale gas production may merely induce Saudi petrochemical firms to expand production in the US.

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    Fri, 01 July 2011

    Saudi Arabia’s coming oil and fiscal challenge

    Saudi Arabia is currently enjoying oil revenues in excess of its fiscal needs, but government spending and domestic consumption of crude oil are rising far faster than overall oil output. We have examined each of these trends in detail and projected their likely path to 2030. For the next decade, high government savings mean the fiscal position remains healthy. For the 2020s, the environment will be very different.

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    Sun, 01 May 2011

    Euro crisis and its impact on Saudi Arabia

    Global markets have entered a period of extreme volatility, as the fallout from debt problems in the eurozone has raised concerns about slowing economic growth and caused an abrupt change in investor sentiment. The idea that global growth is likely to slow later this year as government stimulus is unwound is not new and is already built into our forecasts.

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    Wed, 01 August 2007

    The Riyal’s Peg To The Dollar

    There is a growing popular view that it is time to revalue the Saudi riyal and possibly to follow Kuwait’s lead and end the currency peg to the US dollar. In our view, the costs of changing the exchange rate far outweigh the benefits, particularly as imported inflation is an insignificant part of the current inflation story in Saudi Arabia.

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