Jadwa Quarterly Oil Market Update

Attached is the latest Quarterly Oil Market Update from Jadwa Investment which we trust you will find to be a useful and insightful report.

Key observations from this Q4 report are as follows:

· The current period of low prices is set to remain throughout 2016, pulled down primarily as a result of persistently high oil supply. All-out competition between members of OPEC will be the main reason for continued oversupplied markets.

· Even as non-OPEC supply begins to slow during 2016 the additional supply coming on-line from a sanction free Iran will mean global oil markets will be looking at demand to lift prices out of the doldrums. But recently downward revised global economic growth forecasts by the IMF point to moderate yearly growth in oil demand.

· We expect to see OPEC production rising by a further 500 thousand barrels per day (tbpd) by Q4 2016 year-on-year with most of the rises coming from increased Iranian supply.

· Since Saudi Arabia is currently the only major oil producer with spare oil production capacity it remains well equipped to hold off any attempts of encroachment on its market share.

· Moderate growth in global oil demand coupled with oversupply plus continued building of global commercial crude stocks has led us to cut our full year 2016 Brent forecast to $33 per barrel (pb), from $47 pb previously, and 2017 forecast to $44 pb from 58 pb previously.

· The revision in oil prices have implications for our forecasts on the Kingdom’s fiscal and external balances and total spending for 2016.

For more detailed commentary and statistical analysis, please refer to the full version of the report (see attached).

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Attached is the latest edition of the monthly Chartbook from Jadwa Investment which we hope you will find a useful update on the state of the Saudi economy.