{"id":82979,"date":"2024-02-01T00:00:00","date_gmt":"2024-02-01T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2024\/02\/01\/oil-ministrys-strategy-to-focus-on-price-management-in-2024-2025-but-its-long-term-outlook-on-demand-is-unchanged-report\/"},"modified":"2024-02-01T00:00:00","modified_gmt":"2024-02-01T00:00:00","slug":"oil-ministrys-strategy-to-focus-on-price-management-in-2024-2025-but-its-long-term-outlook-on-demand-is-unchanged-report","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2024\/02\/01\/oil-ministrys-strategy-to-focus-on-price-management-in-2024-2025-but-its-long-term-outlook-on-demand-is-unchanged-report\/","title":{"rendered":"Oil Ministry\u2019s strategy to focus on price management in 2024-2025, but its long-term outlook on demand is unchanged -report"},"content":{"rendered":"

Good morning, wonderful people<\/strong>, and happy almost-weekend.It\u2019s a busy morning for business news, from word that Aramco could be mulling another blockbuster share sale to a USD 8 bn Neom housing contract, and insight into the minds of Saudi shoppers and homebuyers. <\/p>\n

Let\u2019s jump right in. <\/p>\n

<\/a> SMART POLICY- The Oil Ministry\u2019s priority for 2024 and 2025 will be price management<\/strong>, Reuters<\/a> writes a day after Aramco said it would cap its maximum sustained production capacity at 12 mn barrels of oil per day (about 1 mn bpd below the target toward which it had been working since 2020). <\/p>\n

But that doesn\u2019t mean that the ministry\u2019s long-term view on oil demand has changed<\/strong>.<\/strong> Instead, the decision to cap investment in production capacity reflects a view by policymakers that the current \u201cvast spare capacity was enough to supply markets during crises and further investments in new fields would make no economic sense.\u201d<\/p>\n

In context: <\/strong>The new maximum capacity target is 12 mn bpd \u2014 and we\u2019re currently pumping about 9 mn. <\/p>\n

SOUND SMART- Cabinet members including Finance Minister Mohamed Al Jadaan have <\/strong>for <\/strong>months now flagged that <\/strong>they\u2019re pacing out investment<\/a><\/strong>in some high-profile megaprojects<\/a>, as we\u2019ve previously reported. There\u2019s no backing away from critical investments, and we\u2019ll run modest deficits as necessary<\/a>, but officials have no interest in digging a particularly large hole in the budget for the sake of a couple of years. <\/p>\n

AND- A separate <\/strong>Reuters<\/a><\/strong> poll of more than three dozen analysts sees oil prices staying <\/strong>flat this year. <\/strong>OPEC+ production cuts and tensions in the Red Sea will prop-up pricing, as will turmoil in Libya that has taken production capacity off the board. On the other hand, the International Energy Agency sees total supply rising this year thanks to the US shale industry, Canada, Brazil and Guyana. <\/p>\n

OPEC\u2019s production cuts are now registering: <\/strong>Total output fell<\/a> 410k bpd to 23.3 mn in January, the biggest dip since July. <\/p>\n

WATCH THIS SPACE- Aramco <\/strong>could raise the price<\/strong> of its flagship Arab Light crude for <\/strong>Asian clients next month <\/strong>as market fundamentals recover despite continuing tensions in the Red Sea, Reuters writes after polling traders<\/a>.<\/p>\n

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MEANWHILE- Get ready for weather <\/strong>over the coming 48 hours. The national weather center is warning (pdf)<\/a> that we can expect blowing dust and some rainfall in Riyadh today, snowfall in Tabuk and Al Jouf, and moderately heavy winds in Jeddah. Dammam, meanwhile, will escape with scattered clouds. <\/p>\n