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Khaleej Times
17 minutes ago
- Khaleej Times
Why the oil market is tight despite big OPEC+ output hikes
OPEC+ oil producers have used high summer demand to launch their first output increases in three years, but those targets have proved difficult to hit, leaving the market surprisingly tight. On paper, the world's largest group of oil-producing countries should be pumping an extra 2.5 million barrels of oil a day in September versus March, but the data shows that is not likely to happen. The reason is twofold, with some countries finding it hard to pump more, while others are being instructed by OPEC+ to hold back, as they produced above their quotas in the past. "Iraq and to a lesser extent Russia are compensating for past overproduction and Kazakhstan was already producing at maximum capacity back in March," said Jorge Leon, a former OPEC official who now works as head of geopolitical analysis at Rystad Energy. "So the higher quota does not imply higher production." Piling on production month after month might have been expected to lower oil prices, yet Brent crude futures have risen to around $68 a barrel from a 2025 low of $58 in April. It is also notable that prompt prices are now higher than those for six months out, a market dynamic known as backwardation. The prompt premium is justified because rising refinery processing rates and summer demand from power plants in the Middle East are absorbing the OPEC+ hikes, said Energy Aspects analyst Richard Price. "The market is still tight on the prompt." The first-month Brent oil futures contract early this month was trading at a premium of $2.74 to that for delivery in six months, whereas in early May it was at a small discount and a 2025 low. In addition to higher Middle East demand to power summer air conditioning, China has been adding to its inventories. China's crude oil stocks rose by 82 million barrels or almost 900,000 bpd in the second quarter, according to the International Energy Agency. "Chinese oil demand has been better than many expected at the start of the year," said UBS analyst Giovanni Staunovo. "Chinese stockpiling activity has also played a role in keeping crude prices supported." The OPEC+ increases have also come at a time of low stocks in Organisation for Economic Co-operation and Development (OECD) developed nations, a legacy of earlier OPEC+ cuts, a trend that tends to support prices. "Over the past three years, OECD crude inventories have stayed consistently low, especially in the U.S.," said Homayoun Falakshahi, analyst at Kpler. European oil stocks were almost 9% below their five-year average at 394 million barrels in May, according to OPEC data published in July, while U.S. commercial crude stocks in June were also below their five-year average at 419 million barrels. OPEC+ officials have pointed to those low levels as evidence the market needs its increased barrels. THE OPEC+ EIGHT OPEC+ has introduced various output curbs since the pandemic slammed demand, forcing producers to throttle back on oil no one wanted. The tranche of cuts it started to unwind in April involve just eight members - Saudi Arabia, Russia, Iraq, UAE, Kazakhstan, Kuwait, Oman and Algeria. Between April and June they pledged to increase output by 960,000 bpd - a net 730,000 bpd including required cuts - yet OPEC data shows they achieved an increase of only 540,000 bpd. The production data also shows Saudi Arabia accounted for more than 70% of the net increase. Exports rose by just 460,000 bpd from March levels, according to data from analytics firm Vortexa, while world demand grew by an estimated 1 million bpd, according to the International Energy Agency. Saudi effectively accounted for all of the increase, as it boosted exports by 631,000 bpd over the March-June period while shipments from Russia, Iraq, Kazakhstan, Kuwait and Oman fell, Vortexa data showed. Saudi acknowledged that it exceeded its June quota but explained that much of this went into its storage at home and abroad. Exports from Gulf producers typically dip in the summer months because of their own increased summer demand for air conditioning. "The market is telling you it's tight. OPEC announcements need to result in more exports, when we see exports, the market will start to correct," said one veteran crude trader regarding current oil prices. TARGETS VERSUS ACTUAL The current gap reflects in part limited production capacity outside of Saudi Arabia and the United Arab Emirates. Russia, for example, has struggled with Ukrainian attacks on its energy infrastructure. Yet in their monthly meetings to set output levels OPEC+ member states continue to seek higher quotas, even if immediate delivery is problematic, as they can use that extra allowance in the future should their actual capacity rise or OPEC+ request fresh curbs. On August 3 OPEC+ agreed a further increase for September while curbs on members for past overproduction are scheduled to run until next June, ranging in total size per month from about 200,000 to 500,000 bpd. "Similar to the previous months, I expect the effective volume increases to lag the quota increases," said Staunovo at UBS. By September the OPEC+ eight aim to increase output to 32.36 million bpd versus output of 30.80 million bpd achieved in March.
Arabian Post
19 minutes ago
- Arabian Post
Wall Street's jitters highlight case for global diversification
Apprehension has returned to US stock markets, and the reasons are becoming increasingly difficult to ignore. Many asset allocators I speak with are questioning valuations that appear stretched and overly reliant on a handful of technology giants. Although the S&P 500 and the Nasdaq 100 reached fresh highs just last week, the rally already feels vulnerable. Outside the United States, sentiment is notably more optimistic. In Europe, Asia, and across several key emerging markets, investors are finding better value and a wider range of opportunities. ADVERTISEMENT There's growing interest in cyclical and defensive sectors that are trading at more reasonable levels. Allocators are beginning to shift their focus globally in search of better-priced assets and broader exposure. Bond markets have remained relatively calm. Both US Treasuries and UK gilts continue to offer yields that are comfortably above inflation, which is a positive for those seeking stable income. This is particularly noteworthy given the large volume of new debt that both governments are expected to issue in the coming months. Despite the supply pressures, yields have remained steady, which suggests there is still confidence in these instruments. Gold is another asset that continues to reflect a more cautious outlook. Prices remain close to all-time highs. This signals ongoing demand for safe havens, especially as political risk and long-term inflation concerns linger in the background. However, the single biggest driver of uncertainty in markets right now is trade policy. Tariffs are back in focus, and the outlook is murky at best. ADVERTISEMENT We should not expect clarity on the final shape of US trade policy until well into 2026. Many of the recent bilateral agreements signed by the United States, including those with the UK and the European Union, are little more than frameworks for future discussion. They do not provide investors or businesses with the certainty they need to plan ahead. Last Friday, Washington announced a new 39 percent tariff on certain Swiss imports, a move that has already prompted calls from Switzerland for renegotiation. At the same time, the existing US-Mexico-Canada Agreement, signed in 2020, is only guaranteed for another 90 days. Talks to extend or amend it are still ongoing, and the outcome remains unclear. We also do not yet understand the full implications of these new trade measures on corporate earnings, global growth, or inflation. The numbers themselves are higher than many had expected. According to Yale University's Budget Lab, the average tariff now being implemented sits around 18.3 percent. For months, the consensus had been that the figure would hover near 10 percent. That expectation has now been upended. What complicates the picture further is the weak economic data coming out of the United States. Last Friday's payroll report showed a decline in manufacturing jobs. In response, President Trump dismissed the head of the government's labour statistics office, a move that raised eyebrows. Then came a disappointing ISM services survey, which pointed to contraction in the services sector. This followed five consecutive months of contraction in the ISM manufacturing index. Taken together, this makes for an uneasy backdrop to Wall Street's high valuations. While recent second quarter earnings were relatively strong and prompted some upward revisions in forecasts, those upgrades are now under pressure. If incoming data continues to disappoint, it is likely that we will see some of those expectations revised downward. In this environment, investors would do well to maintain a globally diversified approach. Concentrating capital in a single region or sector that appears strong today carries risks that may not be fully visible until sentiment turns. Exposure across different geographies and industries can help reduce vulnerability to localized shocks. Many European and Asian markets are not only more attractively priced but are also less exposed to the fallout from US trade policy. Emerging markets offer the potential for growth that is driven more by domestic demand than by global trade flows. For private investors in particular, well-constructed multi-asset funds remain an effective way to access this broader set of opportunities. These vehicles are designed to deliver strong risk-adjusted returns over time and tend to offer more diversification than an individual investor could achieve alone. The current market environment is a reminder of how quickly sentiment can shift. High valuations, policy uncertainty, and mixed economic data are a potent combination. Rather than chase short-term gains, long-term investors should remain focused on balance, discipline, and diversification. Now is the time to think globally, act selectively, and prepare for a wide range of outcomes. Nigel Green is deVere CEO and Founder Also published on Medium. Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.
Al Etihad
an hour ago
- Al Etihad
UAE, Russian Presidents discuss bilateral strategic partnership in Moscow
7 Aug 2025 19:37 MOSCOW (WAM)UAE President His Highness Sheikh Mohamed bin Zayed Al Nahyan met with His Excellency Vladimir Putin, President of the Russian Federation, to discuss enhancing the strategic partnership between the two countries, in addition to regional and international issues of common two leaders met today at the Kremlin as part of His Highness' official visit to the meeting, His Highness Sheikh Mohamed bin Zayed and His Excellency Putin reviewed progress in UAE-Russia cooperation, particularly in the fields of the economy, trade, investment, space, and energy, as well as other areas that serve the development-focused priorities of both countries and reflect their aim to bolster their strategic Highness the President stated that UAE-Russia relations are based on mutual trust and respect, as well as deep-rooted and constructive engagement spanning more than 50 years. His Highness affirmed the UAE's commitment to building effective partnerships with other countries and enhancing international cooperation to address shared global challenges and foster prosperity and development for Highness Sheikh Mohamed bin Zayed and His Excellency Putin also exchanged views on regional and international issues of mutual interest. In this regard, His Highness affirmed the UAE's steadfast commitment to strengthening peace and stability while advancing diplomatic solutions both regionally and two sides also discussed the importance of the Russia-Arab summit, scheduled to be held in October at the direction of His Excellency Putin, in strengthening Russia's relations with the Arab Highness Sheikh Mohamed bin Zayed and His Excellency Putin reviewed developments in the Middle East, underscoring the need to intensify efforts towards achieving a just, comprehensive, and lasting peace based on the two-state solution with the aim of promoting stability and security for Highness also expressed his appreciation to His Excellency Putin for facilitating the UAE's mediation concerning the exchange of over 4,000 prisoners between Russia and Ukraine, emphasising the UAE's continued willingness to further advance this humanitarian his part, His Excellency Putin welcomed His Highness to Russia, expressing his appreciation for the UAE's ongoing mediation efforts on prisoner Excellency Putin stated that Russia attaches great importance to developing its relations with the UAE, noting that the two countries' cooperation continues to grow, especially in the economic and investment Excellency Putin hosted a luncheon for His Highness and the accompanying arriving earlier at the Kremlin, His Highness the President was received by His Excellency Putin. The national anthems of both countries were played, and His Highness greeted senior officials lined up to welcome him, while His Excellency Putin greeted members of the delegation accompanying His the sidelines of the visit, the two countries signed the Trade in Services and Investment Agreement (TISIA).The agreement was signed on behalf of the UAE by His Excellency Dr Thani bin Ahmed Al Zeyoudi, Minister of Foreign Trade, and on behalf of the Russian side by His Excellency Maxim Reshetnikov, Minister of Economic UAE-Russia TISIA complements the Economic Partnership Agreement signed between the UAE and the Eurasian Economic Union (EAEU), which includes Armenia, Belarus, Kazakhstan, and Kyrgyzstan, in addition to Russia. It provides a special bilateral cooperation framework focusing on services and investment, including in the areas of financial technology, healthcare, transportation, logistics, professional services, and Excellency Suhail Mohammed Al Mazrouei, UAE Minister of Energy and Infrastructure, and His Excellency Andrey Nikitin, Russian Minister of Transport, also signed a Memorandum of Understanding on cooperation in the field of land delegation accompanying His Highness the President attended the talks, including H.H. Sheikh Hamdan bin Mohamed bin Zayed Al Nahyan, Deputy Chairman of the Presidential Court for Special Affairs; Sheikh Mohammed bin Hamad bin Tahnoon Al Nahyan, Advisor to the UAE President; Ali bin Hammad Al Shamsi, Secretary-General of Supreme Council for National Security; Dr. Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology; Dr. Thani bin Ahmed Al Zeyoudi, Minister of Foreign Trade; Mohamed Hassan Al Suwaidi, Minister of Investment; Ahmed Ali Al Sayegh, Minister of State; Faisal Abdulaziz Al Bannai, Adviser to the President for Strategic Research and Advanced Technology Affairs; Dr. Ahmed Mubarak Al Mazrouei, Chairman of the President's Office for Strategic Affairs and Chairman of the Abu Dhabi Executive Office; and Dr. Mohammed Ahmed Al Jaber, UAE Ambassador to the Russian Federation, along with a number of senior talks were also attended by ministers and senior officials from the Russian side. His Highness the President departed Moscow at the conclusion of his official visit to Russia, with military aircraft escorting His Highness' plane through Russian airspace.
