Lower oil prices hit Gulf stock markets

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Most Gulf stock markets were negatively impacted by the fall in crude oil prices despite OPEC+ cuts, while Egyptian markets turned blue as the IMF deal drew closer.

  • A photographer takes pictures of the Khurais oilfield during a tour for journalists, 150 km east-northeast of Riyadh, Saudi Arabia, June 28, 2021 (AP Photo/Amr Nabil, File)

After falling more than 3% in oil and Wall Street stocks on Friday, most Gulf stock markets fell on Sunday. Saudi Arabia’s Tadawul All Share Index TASI fell 0.1% after Aramco fell 1.1%, while Qatar’s QSI extended losses from the previous session after being hit by a 0.7% drop, according to Reuters.

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Fears of a global recession and weaker oil demand, particularly from China, the world’s largest crude oil importer, have driven crude prices down despite production cuts from OPEC+, which in turn has had an impact on Gulf stock markets which are primarily dependent on revenue from oil sales.

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On the other hand, after an IMF statement announcing “major political problems” resolved in Egypt, the country’s index rose. IMF Managing Director Kristalina Georgieva said key policy issues have been resolved after discussions with country officials regarding the lending program.

The stock market index in Egypt saw an overall increase, including a 3.5% rise for Commercial International Bank Egypt, the country’s top lender, in addition to Egypt’s blue chip index which fell 2% .

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China’s commitment to a zero Covid policy has affected the country’s economic activity, leading to lower demand for oil as China continues to battle a spike in cases after a recent day holiday.

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In an attempt to respond to the currency crisis that has created import restrictions and unstable markets due to external debt, the Egyptian authorities are trying to obtain a new package from the IMF during the annual meetings of the IMF and the Bank world which are to be held this week. in the United States, Washington.

It should be noted that the member states of the Organization of the Petroleum Exporting Countries (OPEC) voted last Wednesday on cutting their oil production and agreed to cut their oil production by 2 million barrels per day at the light of the global energy crisis.

Attempting to bend US oil prices when all else has failed, Washington has been actively using its Strategic Petroleum Reserve (SPR) for over a year.

At the current rate of oil production, reserves will fall to their lowest level in 40 years, with just 358 million barrels remaining by the end of October. Last year, the SPR location in Texas and Louisiana reportedly contained 621 million barrels. According to official information, the United States is expected to stop SPR extractions in October.

In light of Saudi Arabia’s decision to support OPEC+ oil production cuts, legislation has been proposed in the United States to stop Washington from supplying weapons to Riyadh, as the authors argued that what the United States sees as the kingdom’s support for Russia deserves “thorough scrutiny of the US-Saudi relationship”.

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