IEA predicts oil supply surplus amid weak China demand in 2025
Global oil prices are currently around $70 per barrel, having dropped over 7 percent last week, even amid rising geopolitical tensions in the Middle East
Updated 22 October 2024
Arab News
RIYADH: The International Energy Agency forecasts weak oil demand growth in China for 2025, despite recent stimulus measures from Beijing.
As the world’s second-largest economy shifts toward electrifying its car fleet and experiences slower growth, this trend is expected to continue, according to IEA Executive Director Fatih Birol.
Historically, China has driven over 60 percent of global oil demand growth over the past decade, with an average economic growth rate of 6.1 percent. However, Birol noted that with the economy projected to grow around 4 percent, energy needs are likely to decline. He highlighted that the demand for electric vehicles, now competitive with traditional cars, will contribute to this decrease.
Birol remarked that the impact of China’s fiscal stimulus has been less significant than anticipated, stating, “It will be very difficult to see a major uptick in Chinese oil demand.”
Global oil prices are currently around $70 per barrel, having dropped over 7 percent last week, even amid rising geopolitical tensions in the Middle East.
Birol pointed out that one reason for the muted price reaction is the weak demand observed this year, with expectations of continued weakness next year.
He noted that without the petrochemical sector, Chinese oil demand would have remained flat.
Additionally, increased supply from non-OPEC producers — such as the US, Canada, Brazil, and Guyana — outpaces global oil demand growth, further limiting price increases.
When asked about the possibility of OPEC+ unwinding production cuts in 2025, Birol stated that the decision lies with OPEC, but he anticipates a surplus in the oil market next year unless significant geopolitical changes occur.
Brent crude futures rose by $1.16, or 1.6 percent, to reach $74.22 a barrel at 10:36 GMT. Meanwhile, U.S. West Texas Intermediate crude futures increased by $1.32, or 1.9 percent, settling at $70.54 a barrel.
Both Brent and WTI experienced significant declines last week, with Brent falling over 7 percent and WTI losing around 8 percent.
ACWA Power and Saudi Aramco ink deals to boost renewables, hydrogen, and desalination
Updated 06 February 2025
Nadin Hassan
RIYADH: Saudi utility giant ACWA Power has signed two agreements with Aramco to accelerate the deployment of renewable energy projects and evaluate the performance of vanadium flow batteries in the Kingdom’s climate.
The first agreement, inked during ACWA Power’s third flagship Innovation Days event, involves the development of an advanced photovoltaic energy forecasting project. The initiative will use big data analytics and machine learning to improve solar power generation predictions.
By improving forecasting accuracy, the model aims to strengthen grid stability, optimize energy dispatch, and improve microgrid management.
The second deal focuses on measuring the efficiency and durability of vanadium flow battery technology in Saudi Arabia’s climate. This initiative will examine how well these batteries can store energy over extended periods and contribute to the increased use of renewables, particularly for water desalination.
This undertaking aligns with the Kingdom’s strategic push for clean energy, reinforcing the initiative’s goal to advance collaboration in renewables and hydrogen technologies while solidifying the nation’s role in the global energy transition.
“By investing in cutting-edge desalination technologies alongside renewable energy innovation and green hydrogen production solutions, we are paving the way for a more resilient and sustainable energy and water infrastructure in Saudi Arabia,” said Thomas Altmann, executive vice president for Innovation and New Technology at ACWA Power.
An agreement was reached by ACWA Power and Hysata. Supplied
Four other agreements were signed by ACWA Power with UK-based Bluewater Bio, global chemicals producer Dow, Australian hydrogen electrolyzer manufacturer Hysata, and King Abdullah University of Science and Technology.
ACWA Power and Bluewater Bio partnered to test advanced filtration technology for desalination projects in Saudi Arabia, with the aims of enhancing the efficiency and sustainability of the process.
Additionally, a desalination-related agreement was signed with Dow to test its anti-scaling chemicals at ACWA Power’s pilot facility.
This initiative aims to gather valuable data on the effectiveness of these chemicals in preventing scaling and contributing to the development of more sustainable solutions.
A pilot agreement between ACWA Power and Australian hydrogen technology company Hysata will focus on advancing cost-effective green hydrogen production, and will facilitate an in-country demonstration of the firm’s high-efficiency electrolyzer technology in the Saudi Arabia.
Representatives from ACWA Power and KAUST shake hands on a deal. Supplied
In addition, ACWA Power and KAUST have extended their master research agreement, to further strengthen their partnership in innovative sustainable solutions for water desalination and solar energy.
Since 2019, the two entities have jointly operated the Center of Excellence for Desalination and Solar Power, fostering research and innovation to support the Kingdom’s ambitious sustainability agenda.
These agreements underscore Saudi Arabia’s commitment to technological advancement and energy transition, reinforcing its leadership in the global shift toward renewables and sustainable water solutions.
The utility company also signed a framework agreement with Fraunhofer IMWS, Fraunhofer ISC, and Fraunhofer IWES, initiating a strategic collaboration in renewable energy and green hydrogen research and development.
This partnership aims to drive innovation in the clean energy sector by leveraging Fraunhofer's expertise in materials science, energy systems, and hydrogen technologies.
The agreement lays the groundwork for joint research initiatives focused on enhancing efficiency, sustainability, and technological advancement in the global energy transition.
Under the theme Innovate for Impact, the inaugural three-day event was held in Riyadh from Feb. 3 to 5, and welcomed over 1,000 delegates.
Held under the patronage of the Ministry of Energy, the gathering focused on elevant technologies brought together government dignitaries, industry leaders, and innovators, researchers, and academics to discuss accelerating the deployment of new technologies, institutionalizing foresight and forward-thinking in the energy transition landscape, and making significant contributions to the realization of Saudi Arabia’s Vision 2030.
RIYADH: Saudi Aramco has significantly raised its crude oil prices for Asian customers in March, reaching their highest levels in over a year.
This price hike comes as a result of rising benchmark prices, driven by increased demand from China and India, as well as supply disruptions due to US sanctions on Russian oil.
According to an official statement, the official selling price for the benchmark Arab Light crude has been increased by $2.40 per barrel. For March, the price for Asian buyers has been set at $3.90 per barrel above the regional benchmark.
Other grades also saw price hikes, with the OSP for Arab Extra Light and Super Light increasing by $2.40 and $2.10 per barrel, respectively. The OSP for Arab Medium crude was raised by $2.50 per barrel, while the price for Arab Heavy crude went up by $2.60 per barrel.
For North America, Aramco has set the March OSP for Arab Light crude at $3.80 per barrel above the Argus Sour Crude Index.
Earlier this week, OPEC+ members reaffirmed their commitment to maintaining stability in the global oil market through production cuts. The 58th Joint Ministerial Monitoring Committee session, conducted via videoconference, reviewed crude oil production data for November and December 2024 and highlighted strong compliance by both OPEC and non-OPEC countries involved in the Declaration of Cooperation.
The committee reiterated its commitment to the DoC, which is set to extend through the end of 2026. It also commended Kazakhstan and Iraq for their improved compliance, including voluntary production adjustments.
OPEC also welcomed renewed pledges from overproducing countries to fully comply with production targets.
Saudi Aramco produces five grades of crude oil: Super Light, Arab Light, Arab Extra Light, Arab Medium, and Arab Heavy. These grades are differentiated by their density. Super Light has a density greater than 40, Arab Extra Light ranges from 36 to 40, Arab Light falls between 32 and 36, Arab Medium is between 29 and 32, and Arab Heavy has a density of less than 29.
Saudi Aramco typically releases its crude OSPs around the 5th of each month, setting the price trend for other major producers, including Iran, Kuwait, and Iraq. These price benchmarks affect approximately 9 million barrels per day of crude oil shipments to Asia.
Oil Updates — crude little changed as Trump policies continue to drag on prices
Updated 06 February 2025
Reuters
LONDON: Oil prices edged up in Asian trading on Thursday after Saudi Arabia’s state oil company sharply raised March oil prices, but the increase was barely a blip on the biggest slide in benchmark Brent prices in nearly three months the previous day.
Brent crude futures rose 15 cents to $74.76 a barrel by 10:40 a.m. Saudi time. US West Texas Intermediate crude was up 20 cents to $71.23 a barrel.
Oil prices had fallen more than 2 percent on Wednesday as a large build in US crude and gasoline stockpiles signalled weaker demand, and as investors weighed the implications of a new round of US-China trade tariffs, including duties on energy products.
Prices have plunged about 10 percent from the 2025 highs on Jan. 15, five days before Donald Trump took over as US President. Analysts expect markets to be volatile in the coming weeks.
“We can expect significant volatility in pricing over the coming weeks and months as markets scramble to weigh the impact of Trump’s new policy positions, not least regarding tariff measures,” analysts from BMI said in a note on Thursday.
A sharp increase in prices for Asian buyers by Saudi Aramco, the world’s leading oil exporter, managed to stem Wednesday’s sell-off.
“After the overnight sell-off and the Saudi news, there is likely to be some buying from traders covering shorts ahead of a strong band of support in the $70/68 region,” said Tony Sycamore, market analyst with IG.
The US last month imposed aggressive new sanctions on Russia’s oil trade, targeting the “shadow vessels” understood to be utilized to evade trade blockades. Since assuming office, Trump has imposed tariffs on China, although they fell short of his campaign threats.
Beijing in response had announced tariffs on imports of US oil, liquefied natural gas and coal on Tuesday, but China’s purchases from the US are relatively modest, blunting the impact of the new measures.
“While some tariff measures could put upward pressure on oil prices, the net impact will likely be bearish, given their potentially adverse effects on the global economy and Trump’s proven willingness to offer carve-outs for energy (to limit impacts to supply),” BMI said.
Oil Updates — prices decline amid rising US crude inventories, Sino-US tariff war
Updated 05 February 2025
Reuters
SINGAPORE: Oil prices slid on Wednesday as rising stockpiles in the US and market worries about a new Sino-US trade war offset President Donald Trump’s renewed push to eliminate Iranian crude exports.
Brent crude futures were down 39 cents, or 0.51 percent, at $75.81 a barrel by 7:27 a.m. Saudi time. US West Texas Intermediate crude (WTI) lost 26 cents, or 0.36 percent, to $72.44.
Oil on Tuesday traded in a wide range, with WTI falling at one point by 3 percent, its lowest since Dec. 31, after China announced tariffs on US imports of oil, liquefied natural gas and coal in retaliation to US levies on Chinese exports.
Prices rebounded, however, after Trump restored the “maximum pressure” campaign on Iran to curtail its nuclear program he enacted in his first term that cut Iranian crude exports to zero.
Weighing down the market on Wednesday was the higher-than-expected US crude inventories data overnight, said Jun Rong Yeap, a market strategist at IG.
Crude stocks rose by 5.03 million barrels in the week ended Jan. 31, according to market sources, citing American Petroleum Institute figures.
Gasoline inventories rose by 5.43 million barrels, and distillate stocks fell by 6.98 million barrels, the API reported, according to the sources.
Official US government oil inventory data is due to be released at 6:30 p.m. Saudi time on Wednesday.
Rising crude and fuel stockpiles in the world’s biggest oil consumer signal consumption weakness, adding to investor worries about the impact of tarrifs on the global economic and energy demand outlooks.
The impact of China’s retaliatory tariffs on US energy imports will be limited “given that neither global supply nor demand of these commodities are changed by China’s tariffs,” analysts at Goldman Sachs said in a note on Tuesday.
Both countries will be able to find alternative markets, the note said.
As for Iran, Trump on Tuesday restored his “maximum pressure” campaign on Iran that includes efforts to drive its oil exports down to zero in order to stop Tehran from obtaining a nuclear weapon.
While Trump said he was open to a deal with Iran, he signed a presidential memorandum re-imposing Washington’s tough policy on Iran. The plan could impact about 1.5 million barrels per day of oil that the country exports, analysts at ANZ said on Wednesday, citing shiptracking data.
“The clampdown on Iran may be what is needed to stabilize bearish sentiments for oil prices for now and there may room for further recovery, at least in the near term,” said IG’s Yeap.
Oil Updates — US crude prices down nearly 2% as levies on China take effect
US tariffs on China take effect
China counters with 10% tariffs on crude, coal and LNG
Trump pauses tariffs on Mexico, Canada for a month
Updated 04 February 2025
Reuters
TOKYPO/SINGAPORE: US crude prices fell by nearly 2 percent on Tuesday as US tariffs on China took effect, though President Donald Trump paused for a month a decision on steep levies on neighbors Canada and Mexico.
US West Texas Intermediate crude declined $1.32, or 1.8 percent, to trade at $71.84 per barrel, while Brent futures fell 87 cents, or 1.2 percent, to $75.09 by 9:17 a.m. Saudi time.
US tariffs of 10 percent on Chinese imports took effect at mid-day in Asian trade, spurring Beijing to retaliate with levies of 15 percent on US coal and liquefied natural gas and 10 percent on crude oil starting from Feb. 10.
“China’s counter-tariffs on the US may be perceived as a sign of escalation and may reduce the likelihood of a temporary resolution akin to US agreements with Mexico and Canada,” IG market strategist Yeap Jun Rong said in an email.
“As such, broader risk sentiments pare some optimism amid the changing dynamics, with oil prices extending losses further.”
He added, “Market participants are back to price for potential downside risks to global growth in the event of further tit-for-tat measures from both the United States and China.”
China’s 2024 crude oil imports from the US make up 1.7 percent of its total imports of crude, customs data show.
“WTI flows to China will be impacted, as a 10 percent tariff ... will render WTI delivered to China very expensive against other alternative crude like Kazakhstan’s CPC and Abu Dhabi’s Murban,” Sparta Commodities’ senior analyst June Goh told Reuters.
“However, in the big scheme of things, this should not impact the price of WTI significantly as WTI can still flow to other regions easily,” she added on messaging app WhatsApp.
Earlier, Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum said they had agreed to bolster border enforcement efforts in response to Trump’s demand to crack down on immigration and drug smuggling.
That would pause for 30 days tariffs of 25 percent, with a 10 percent tariff on energy imports from Canada, that had been set to take effect on Tuesday.
On the demand side, investors will be looking out for weekly US oil stockpile data for the week to Jan. 31. Analysts polled by Reuters expected that crude inventories rose, while gasoline and distillate inventories probably fell.
