Latest news with #TradePolicies
Khaleej Times
a day ago
- Business
- Khaleej Times
Soaring Saudi exports and trade tensions will test oil price resilience
Oil markets have remained remarkably resilient so far this year, despite concerns over U.S. President Donald Trump's trade policies and rising OPEC+ production quotas. But that strength will now be tested, as Saudi output is starting to surge just as demand appears to be slowing. Benchmark oil prices are currently near $70 a barrel, down from a 2025 high of $82 in mid-January, but above the four-year low of $62 set in May. That followed Trump's "Liberation Day" tariff flip-flop, which sparked confusion about the policy direction and fears of a severe disruption to global economic activity and oil consumption. Investor jitters were compounded by a significant OPEC+ policy shift. Under the leadership of Saudi Arabia, the group including the Organisation of the Petroleum Exporting Countries and Russia, started to aggressively ramp up production quotas in April for the first time in over three years. The group is set to add 2.5 million barrels per day of production between April and September. Given this backdrop, why has crude remained so resilient? It's likely in large part because most of these fears have yet to materialise. Crucially, Trump not only delayed his 'reciprocal tariffs', but he also held positive talks with Beijing, which managed to defuse some of the market's worst fears about trade tensions between the world's two biggest economies. To be sure, economic activity has slowed in recent months, but not nearly as badly as the initial drop in oil prices implied. Global GDP is forecast to slow to 2.3% in 2025, according to a recent World Bank report, nearly half a percentage point lower than expected at the start of the year. The OPEC+ supply hikes were also initially more talk than action. The decision by OPEC+ to unwind 2.2 million bpd of supply cuts, as well as to raise the UAE's baseline production by 300,000 bpd starting in April, initially had little impact on global supplies, mostly because several members had already been producing above their assigned quotas. While Saudi Arabia's production did rise significantly in June by 700,000 bpd to 9.8 million bpd, a large share of the increase was consumed domestically by its refineries as well as in power plants that use crude to generate electricity during summer's peak demand, limiting exports. Saudi "crude burn" is set to reach 695,000 bpd in July and is expected to remain elevated in August, according to consultancy Wood Mackenzie. Shifting tides The tide may be turning, however. As we move into the second half of the year, the negative trends that spooked investors in April now appear to be building. Trade tensions have come back to the fore in recent days after Trump outlined new tariffs for a number of countries, including allies Japan and South Korea, along with a 50% tariff on copper, and a 35% levy on many Canadian goods. Crude consumption already started to falter in recent months. While demand rose by a robust 1.1 million barrels per day in the first quarter of 2025, growth is set to halve in the second quarter, according to the International Energy Agency. Importantly, demand in countries that are heavily dependent on trade with the United States seems to have taken a hit. Demand in China dropped in the second quarter from a year earlier by 160,000 bpd, Japan's by 80,000 bpd, Mexico's by 40,000 bpd and South Korea's by 70,000 bpd. U.S. demand over the same period also contracted by 60,000 bpd, according to the IEA. These trends could accelerate if the trade wars kick in in earnest. Meanwhile, oil production is expected to start rising significantly in the coming months, particularly from Saudi Arabia, the world's top oil exporter, as it ramps up production and as its domestic crude burn eases as summer ebbs. Saudi Arabia's increase in domestic consumption initially meant its oil exports only rose from 5.9 million bpd in April to 6.4 million bpd in June, according to Kpler data. Saudi shipments are, however, set to surge to 7.5 million bpd in July, the highest since April 2023. Saudi production and exports are likely to increase further in August as Riyadh seeks to regain market share. Its slice of the global market declined to 11% last year from a 13% average in the previous three decades. The kingdom's exports to China are set to rise to the highest in more than two years in August, Reuters reported. The increases in OPEC+ output, together with large increases in production outside the group, are set to increase global supply by 2.1 million bpd to 105.1 million bpd in 2025, according to the IEA. The energy watchdog forecasts global demand to reach 103.7 million bpd this year, which implies a significant oversupply of 1.4 million bpd in 2025. Oil prices will therefore likely come under heavy downward pressure in the coming months, particularly once demand ebbs in the fourth quarter. And this downward push will only get stronger if Trump's renewed trade threats turn out to have real bite.
Reuters
2 days ago
- Business
- Reuters
Soaring Saudi exports and trade tensions will test oil price resilience
LONDON, July 14 - Oil markets have remained remarkably resilient so far this year, despite concerns over U.S. President Donald Trump's trade policies and rising OPEC+ production quotas. But that strength will now be tested, as Saudi output is starting to surge just as demand appears to be slowing. Benchmark oil prices are currently near $70 a barrel, down from a 2025 high of $82 in mid-January, but above the four-year low of $62 set in May. That followed Trump's "Liberation Day" tariffflip-flop, which sparked confusion about the policy direction and fears of a severe disruption to global economic activity and oil consumption. Investor jitters were compounded by a significant OPEC+ policy shift. Under the leadership of Saudi Arabia, the group including the Organization of the Petroleum Exporting Countries and Russia, started to aggressively ramp up production quotas in April for the first time in over three years. The group is set to add 2.5 million barrels per day of production between April and September. Given this backdrop, why has crude remained so resilient? It's likely in large part because most of these fears have yet to materialize. Crucially, Trump not only delayed his 'reciprocal tariffs', but he also held positive talks with Beijing, which managed to defuse some of the market's worst fears about trade tensions between the world's two biggest economies. To be sure, economic activity has slowed in recent months, but not nearly as badly as the initial drop in oil prices implied. Global GDP is forecast to slow to 2.3% in 2025, according to a recent World Bank report, opens new tab, nearly half a percentage point lower than expected at the start of the year. The OPEC+ supply hikes were also initially more talk than action. The decision by OPEC+ to unwind 2.2 million bpd of supply cuts, as well as to raise the United Arab Emirates baseline production by 300,000 bpd starting in April, initially had little impact on global supplies, mostly because several members had already been producing above their assigned quotas. While Saudi Arabia's production did rise significantly in June by 700,000 bpd to 9.8 million bpd, a large share of the increase was consumed domestically by its refineries as well as in power plants that use crude to generate electricity during summer's peak demand, limiting exports. Saudi "crude burn" is set to reach 695,000 bpd in July and is expected to remain elevated in August, according to consultancy Wood Mackenzie. The tide may be turning, however. As we move into the second half of the year, the negative trends that spooked investors in April now appear to be building. Trade tensions have come back to the fore in recent days after Trump outlined new tariffs for a number of countries, including allies and , along with a 50% tariff , and a 35% levy on many Canadian goods. Crude consumption already started to falter in recent months. While demand rose by a robust 1.1 million barrels per day in the first quarter of 2025, growth is set to halve in the second quarter, according to the International Energy Agency. Importantly, demand in countries that are heavily dependent on trade with the United States seems to have taken a hit. Demand in China dropped in the second quarter from a year earlier by 160,000 bpd, Japan's by 80,000 bpd, Mexico's by 40,000 bpd and South Korea's by 70,000 bpd. U.S. demand over the same period also contracted by 60,000 bpd, according to the IEA. These trends could accelerate if the trade wars kick in in earnest. Meanwhile, oil production is expected to start rising significantly in the coming months, particularly from Saudi Arabia, the world's top oil exporter, as it ramps up production and as its domestic crude burn eases as summer ebbs. Saudi's increase in domestic consumption initially meant its oil exports only rose from 5.9 million bpd in April to 6.4 million bpd in June, according to Kpler data. Saudi shipments are, however, set to surge to 7.5 million bpd in July, the highest since April 2023. Saudi production and exports are likely to increase further in August as Riyadh seeks to regain market share. Its slice of the global market declined to 11% last year from a 13% average in the previous three decades. The Kingdom's exports to China are set to rise to the highest in more than two years in August, Reuters reported. The increases in OPEC+ output, together with large increases in production outside the group, are set to increase global supply by 2.1 million bpd to 105.1 million bpd in 2025, according to the IEA. The energy watchdog forecasts global demand to reach 103.7 million bpd this year, which implies a significant oversupply of 1.4 million bpd in 2025. Oil prices will therefore likely come under heavy downward pressure in the coming months, particularly once demand ebbs in the fourth quarter. And this downward push will only get stronger if Trump's renewed trade threats turn out to have real bite. Enjoying this column? Check out Reuters Open Interest (ROI),, opens new tabyour essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis. Markets are moving faster than ever. ROI, opens new tab can help you keep up. Follow ROI on LinkedIn, opens new tab and X., opens new tab
Zawya
08-07-2025
- Business
- Zawya
Mideast Stocks: Gulf stocks mixed on US tariff uncertainty
Gulf equities ended mixed on Tuesday, with investors exercising caution over U.S. trade policies after President Donald Trump announced steep import levies on several trading partners and pushed the tariff deadline to August 1. While Gulf economies were spared from immediate measures, Trump had earlier announced plans to impose an additional 10% tariff on countries aligning with the "anti-American policies" of the BRICS bloc, which includes the UAE. Saudi Arabia, while not a BRICS member, attended a BRICS meeting in April. Saudi Arabia's benchmark index dropped 0.5%, ending a four-day winning streak as most sectors closed in red. ACWA Power Company slid 3.4%, while Al Rajhi Bank fell 0.2%. Oil prices - a catalyst for the Gulf's financial markets -retreated after gaining nearly 2% in the previous session on tariff concerns and a higher-than-expected increase in OPEC+ output planned for August. Dubai's main share index lost 0.1%, after reaching a 17-year peak the previous day, with blue-chip developer Emaar Properties dropping 0.7%. In Abu Dhabi, the index was marginally up. Qatar's benchmark index added 0.3%, supported by a 1.1% rise in the Qatar Islamic Bank. Meanwhile, Egypt's stock exchange said it had suspended trading on Tuesday, citing ongoing disruptions affecting brokerage firms' ability to communicate efficiently across the trading system, a day after a fire broke out in a telecoms data centre in Cairo. SAUDI ARABIA dropped 0.5% to 11,294 ABU DHABI added 0.1% to 10,012 DUBAI eased 0.1% to 5,794 QATAR firmed 0.3% to 10,834 BAHRAIN was up 0.7% to 1,961 OMAN slipped 0.5% to 4,554 KUWAIT increased 0.2% to 9,213 (Reporting by Amna Mariyam and Ateeq Shariff in Bengaluru; Editing by Leroy Leo)
The Independent
30-06-2025
- Business
- The Independent
Asian shares are mixed after US stocks hit an all-time high
Asian shares started the week with gains after U.S. stocks closed at an all-time high following their recovery from the shocks of the Trump administration's trade policies. Canada's decision to cancel a plan to tax U.S. technology firms that had led President Donald Trump to halt trade talks helped to steady the markets. U.S. stock futures advanced after Canadian Prime Minister Mark Carney said the talks had resumed. In Tokyo, the Nikkei 225 climbed 0.6% to 40,395.99. Hong Kong's Hang Seng lost 0.3% to 24,207.36, while the Shanghai Composite index advanced 0.5% to 3,438.46. China reported that its factory activity improved slightly in June after Beijing and Washington agreed in May to postpone imposing higher tariffs on each others' exports, though manufacturing remained in contraction. In South Korea, the Kospi gained 0.5% to 3,070.93. Australia's S&P/ASX 200 jumped 0.6% to 8,560.80. Taiwan's Taiex lost 1.4% and the Sensex in India was down 0.4%. In Bangkok, the SET was up 0.3%. On Friday, the S&P 500 rose 0.5% to 6,173.07, above its previous record set in February. The key measure of Wall Street's health fell nearly 20% from Feb. 19 through April 8. The Nasdaq composite gained 0.5% to 20,273.46, its own all-time high. The Dow Jones Industrial Average rose 1% to 43,819.27. The gains on Friday were broad, with nearly every sector within the S&P 500 rising. Nike soared 15.2% for the biggest gain in the market, despite warning of a steep hit from tariffs. An update on inflation Friday showed prices ticked higher in May, though the rate mostly matched economists' projections. Inflation remains a big concern. Trump's on-again-off-again tariff policy has made it difficult for companies to make financial forecasts and strained household budgets. A long list of businesses from carmakers to retailers have warned that higher import taxes will likely hurt their revenues and profits. The U.S. has 10% baseline tariffs on all imported goods, along with higher rates for Chinese goods and other import taxes on steel and autos and the threat of more severe tariffs continues to hang over the economy. The current pause on a round of retaliatory tariffs against a long list of nations is set to expire on July 9. Failure to negotiate deals or further postpone the tariffs could once again rattle investors and consumers. In an interview with Fox News Channel's 'Sunday Morning Futures,' Trump said his administration will notify countries that the trade penalties will take effect unless there are deals with the United States. Letters will start going out 'pretty soon' before the approaching deadline, he said. The Federal Reserve is monitoring the tariff situation with a big focus on inflation. The rate of inflation has been stubbornly sitting just above the central bank's target of 2%. In a report Friday, its preferred gauge, the personal consumption expenditures index, rose to 2.3% in May. That's up from 2.2% the previous month. The Fed cut interest rates three times in late 2024 following a historic series of rate hikes to cool inflation. The PCE was as high as 7.2% in 2022 while the more commonly used consumer price index hit 9.1%. The Fed hasn't cut rates so far in 2025 over worries that tariffs could reignite inflation and hamper the economy. Economists still expect at least two rate cuts before the end of the year. Bond yields held relatively steady. The yield on the 10-year Treasury rose to 4.28% from 4.27% late Friday. The two-year Treasury yield, which more closely tracks expectations for what the Federal Reserve will do, stood at 3.74%. In other dealings early Monday, U.S. benchmark crude oil lost 8 cents to $65.44 per barrel. Brent crude, the international standard, gained 6 cents to $66.86 per barrel. The U.S. dollar fell to 143.93 Japanese yen from 144.46 yen. The euro rose to $1.1730 from $1.1725. __ AP Business Writers Damian J. Troise and Alex Veiga contributed.
Associated Press
30-06-2025
- Business
- Associated Press
Asian shares are mixed after US stocks hit an all-time high
BANGKOK (AP) — Asian shares started the week with gains after U.S. stocks closed at an all-time high following their recovery from the shocks of the Trump administration's trade policies. Canada's decision to cancel a plan to tax U.S. technology firms that had led President Donald Trump to halt trade talks helped to steady the markets. U.S. stock futures advanced after Canadian Prime Minister Mark Carney said the talks had resumed. In Tokyo, the Nikkei 225 climbed 0.6% to 40,395.99. Hong Kong's Hang Seng lost 0.3% to 24,207.36, while the Shanghai Composite index advanced 0.5% to 3,438.46. China reported that its factory activity improved slightly in June after Beijing and Washington agreed in May to postpone imposing higher tariffs on each others' exports, though manufacturing remained in contraction. In South Korea, the Kospi gained 0.5% to 3,070.93. Australia's S&P/ASX 200 jumped 0.6% to 8,560.80. Taiwan's Taiex lost 1.4% and the Sensex in India was down 0.4%. In Bangkok, the SET was up 0.3%. On Friday, the S&P 500 rose 0.5% to 6,173.07, above its previous record set in February. The key measure of Wall Street's health fell nearly 20% from Feb. 19 through April 8. The Nasdaq composite gained 0.5% to 20,273.46, its own all-time high. The Dow Jones Industrial Average rose 1% to 43,819.27. The gains on Friday were broad, with nearly every sector within the S&P 500 rising. Nike soared 15.2% for the biggest gain in the market, despite warning of a steep hit from tariffs. An update on inflation Friday showed prices ticked higher in May, though the rate mostly matched economists' projections. Inflation remains a big concern. Trump's on-again-off-again tariff policy has made it difficult for companies to make financial forecasts and strained household budgets. A long list of businesses from carmakers to retailers have warned that higher import taxes will likely hurt their revenues and profits. The U.S. has 10% baseline tariffs on all imported goods, along with higher rates for Chinese goods and other import taxes on steel and autos and the threat of more severe tariffs continues to hang over the economy. The current pause on a round of retaliatory tariffs against a long list of nations is set to expire on July 9. Failure to negotiate deals or further postpone the tariffs could once again rattle investors and consumers. In an interview with Fox News Channel's 'Sunday Morning Futures,' Trump said his administration will notify countries that the trade penalties will take effect unless there are deals with the United States. Letters will start going out 'pretty soon' before the approaching deadline, he said. The Federal Reserve is monitoring the tariff situation with a big focus on inflation. The rate of inflation has been stubbornly sitting just above the central bank's target of 2%. In a report Friday, its preferred gauge, the personal consumption expenditures index, rose to 2.3% in May. That's up from 2.2% the previous month. The Fed cut interest rates three times in late 2024 following a historic series of rate hikes to cool inflation. The PCE was as high as 7.2% in 2022 while the more commonly used consumer price index hit 9.1%. The Fed hasn't cut rates so far in 2025 over worries that tariffs could reignite inflation and hamper the economy. Economists still expect at least two rate cuts before the end of the year. Bond yields held relatively steady. The yield on the 10-year Treasury rose to 4.28% from 4.27% late Friday. The two-year Treasury yield, which more closely tracks expectations for what the Federal Reserve will do, stood at 3.74%. In other dealings early Monday, U.S. benchmark crude oil lost 8 cents to $65.44 per barrel. Brent crude, the international standard, gained 6 cents to $66.86 per barrel. The U.S. dollar fell to 143.93 Japanese yen from 144.46 yen. The euro rose to $1.1730 from $1.1725. __ AP Business Writers Damian J. Troise and Alex Veiga contributed.
