Saudi Arabia seems keen on defending its market share against growing output from rival producers
ALKHABEER CAPITAL’s ANALYSIS OF THE OIL MARKET
China’s factory activity shrank the most in two years, and the Chinese economic growth rate reached its lowest since the second quarter of 2009

Jeddah, Saudi Arabia – 6 September 2015: Alkhabeer Capital, a leading asset management and investment firm based in Saudi Arabia, and authorized by the Capital Market Authority (license number 07074-37), announced the release its analysis of the oil market. The analysis addresses the future outlook of oil in light of economic and geopolitical events. Oil prices are expected to remain subdued this year and for the most of next year, as the global supply glut is likely to persist, while demand is anticipated to increase only at a modest rate. The analysis also addresses supply and demand expectations and the negative and positive effects of oil on the region, with surging output from key OPEC members and prospects of fresh supply from Iran will further pressurize oil. Besides, technological innovations have led shale production to remain remarkably resilient.

Analysis of the Oil Market

The analysis showed that subdued growth in China, one of the largest oil consuming nations, will likely lead to lower demand. Moreover, most of the additional recent demand was led by strategic stockpiling, which might start abating by next year. The current record high levels of oil inventories across the OECD countries might delay the timing of any upward movement in oil price. Although major oil companies have scaled back their expansion plans, we do not expect an immediate impact as most investment projects have a lead time of a few years. Meanwhile, Increase in usage of fuel efficient technologies and a stronger US Dollar would add to the woes. Moreover, An unexpected escalation of geopolitical conflicts in the Middle East and elsewhere could reverse the course of oil prices.

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