Economic updates
Our in-depth, independent reports cover the macroeconomic environment, the Saudi government’s annual budget, and Saudi Arabia’s monetary and financial developments, labor market, and inflation.
Oil Note: OPEC Announces Production Cuts
Macroeconomic reportOPEC agreed to cut its own production by 1.2 million barrels per day (mbpd), to 32.5 mbpd, on 30th of November. Oil prices immediately rose by 8 percent following the announcement and could rise even further in the short term. Whether prices remain elevated will depend on OPEC implementing its agreement with discipline as well as no major rises in US shale oil supply. Overall, whilst the OPEC cuts represent an up-side risk to oil prices, due to the hurdles mentioned above, we are not revising our current forecasts just yet, but will be monitoring developments closely.
The Impact of Lower Oil Prices on Shale Oil
Oil market reportThe Impact of Lower Oil Prices on Shale Oil
The impact of lower oil prices on shale oil- US Shale Oil at an Inflection Point
Oil market reportUS shale oil production continued to increase even as oil prices tumbled 50 percent but lower oil prices have begun to take their toll. Sustained drops in US oil production are expected as oil hedges expire, financing from secured lending is tightened and the high yield debt market becomes too expensive. Aside from shale oil, the lower oil price environment will also impact global oil supply but Saudi Arabia will be the main beneficiary when global oil markets become tighter and prices rebound by 2020.
Quarterly oil market update (Q2 2015): Glut in global oil markets to persist longer
A general improvement in oil demand and slowdown in the rate of growth in US shale oil output combined to push prices up 13 percent, quarter-on-quarter, in Q2 2015. US oil production is estimated to have fallen by 4 percent, in Q2 2015, year-on-year. Increases from OPEC and non-OPEC sources, however, will ensure that global oil balances remain in surplus throughout 2015. As a result we see full year Brent crude oil averaging $61 per barrel. Domestically, Saudi crude consumption will reach 3mbpd in Q3 2015, as domestic demand peaks due to the summer months. In the last three years, quarter-on-quarter growth in Q3 has averaged 250 thousand barrels per day, and we expect to see a similar quarterly rise in total crude consumption this year as well.