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Business Recorder
5 days ago
- Business
- Business Recorder
Status quo likely as MPC meets amid global uncertainty
The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) will meet shortly for its final session scheduled for the fiscal year, with analysts widely anticipating the central bank to maintain the status quo. In its last meeting held on May 5, 2025, the MPC cut the policy rate by 100 basis points (bps) to 11%. This was the lowest policy rate since March 2022 (9.75%). The central bank has cut the rate by 1,100bps since June from an all-time high of 22%. Market expectations Market experts expected the central bank to hold the key policy rate at 11%. 'While domestic macroeconomic indicators have improved significantly, particularly inflation and the external account, we believe the central bank is likely to adopt a wait-and-see approach in light of emerging global risks and domestic policy adjustments,' Arif Habib Limited (AHL), a brokerage house, said in its report. AHL, in its report, was of the view that while the domestic landscape supports an easing bias, recent geopolitical developments have raised the stakes. 'Escalating tensions in key oil-producing regions have triggered a sharp surge in global oil prices. Benchmark crude contracts, including Brent, WTI, and Arab Light, have risen close to 10-12% WoW, with daily spikes exceeding 6% as of the latest reading. 'For an oil-importing economy like Pakistan, this poses direct and indirect inflationary risks,' AHL noted. Analysts at Topline Securities also believed that the central bank's MPC would observe a status quo as international crude oil prices have rebounded to US$68-70/barrel amidst rising tensions in the Middle East region and an expected US-China deal. 'This warrants a cautious approach from policy makers, in our view, as oil prices' movement has remained a major driver of inflation in past. 'Some of the major notifications are also expected before the start of next fiscal year, i.e. gas price notification, and electricity price notification, among others,' Topline said in its report. Similarly, a Reuters poll found that the SBP is set to hold its key interest rate at 11% due to geopolitical tension, as analysts cite inflation risks from rising global commodity prices. 'There remains an upside risk of a rise in global commodity prices in light of geopolitical tensions, which could mark a return to inflationary pressures,' said Ahmad Mobeen, senior economist at S&P Global Market Intelligence. Previous MPC meeting In its last meeting, the MPC of the central bank cut the policy rate by 100 bps to 11%, contrary to market expectations. The committee, at that time, noted that inflation declined sharply during March and April, mainly due to a reduction in administered electricity prices and a continued downward trend in food inflation. 'Core inflation also declined in April, primarily reflecting favourable base effects amidst moderate demand conditions. 'Overall, the MPC assessed that the inflation outlook has improved further relative to the previous assessment,' read the statement. Since the last MPC meeting, several key economic developments have occurred. The rupee has depreciated by 0.6%, while petrol prices increased by 2.3%. Internationally, oil prices have significantly jumped by over 25% since the last MPC, hovering around $72 per barrel amid heightened regional tensions. Pakistan's headline inflation clocked in at 3.5% on a year-on-year basis in May 2025, a reading higher than that of April 2025, when it stood at 0.3%, showed Pakistan Bureau of Statistics (PBS) data. In addition, Pakistan's current account (C/A) posted a slight surplus of $12 million in April 2025, against a massive surplus of $1.2 billion (revised) last month, data released by the central bank showed. On a year-on-year (YoY) basis, the C/A decreased 96% against a surplus of $315 million (revised) recorded in the same month last year. Foreign exchange reserves held by the SBP increased by $167 million on a weekly basis, clocking in at $11.68 billion as of June 6. Total liquid foreign reserves held by the country stood at $16.88 billion. Net foreign reserves held by commercial banks stood at $5.12 billion.
Business Recorder
13-06-2025
- Business
- Business Recorder
Status quo likely as rising oil prices play on SBP's mind, say analysts
The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) is expected to hold the key policy rate at 11% in its upcoming meeting scheduled for Monday, market analysts noted. 'While domestic macroeconomic indicators have improved significantly, particularly inflation and the external account, we believe, the central bank is likely to adopt a wait-and-see approach in light of emerging global risks and domestic policy adjustments,' Arif Habib Limited (AHL) said in its report. The MPC of the central bank will meet on June 16 to decide on the policy rate, the central bank announced on Thursday. The SBP said it will issue the Monetary Policy Statement through a press release on the same day. In its last meeting held on May 5, 2025, the MPC cut the policy rate by 100 basis points (bps) to 11%. This was the lowest policy rate since March 2022 (9.75%). The central bank has cut the rate by 1,100bps since June from an all-time high of 22%. At the time, the MPC noted that inflation declined sharply during March and April, mainly due to a reduction in administered electricity prices and a continued downtrend in food inflation. AHL, in its report released on Friday, was of the view that while the domestic landscape supports an easing bias, recent geopolitical developments have raised the stakes. 'Escalating tensions in key oil-producing regions have triggered a sharp surge in global oil prices. Benchmark crude contracts, including Brent, WTI, and Arab Light, have risen close to 10-12% WoW, with daily spikes exceeding 6% as of the latest reading. 'For an oil-importing economy like Pakistan, this poses direct and indirect inflationary risks,' AHL noted. The brokerage house, citing its estimates, said that for every USD 5/bbl increase in global oil prices (on an annualised basis) adds roughly 23bps to headline inflation directly. 'Additionally, any upward revision in domestic energy tariffs, though necessary to prevent further accumulation of circular debt, would carry inflationary implications. The timing and magnitude of these adjustments, alongside changes in food prices, and potential global trade disruptions, could alter the inflation outlook materially,' it shared. Topline Securities, another brokerage house, also expects the status quo as international crude oil prices have rebounded to US$68-70/barrel amidst rising tensions in the Middle East region and an expected US-China deal. 'This warrants a cautious approach from policy makers, in our view, as oil prices' movement has remained a major driver of inflation in past. 'Some of the major notifications are also expected before the start of next fiscal year i.e. gas price notification, and electricity price notification, among others,' Topline said in its report. The brokerage house shared that in its poll, 56% of the market participants expect a status quo in the upcoming monetary policy meeting compared to 31% in the last poll. While 44% are expecting a rate cut of at least 50bps. Out of the total 44% rate cut participants, 19% are expecting a 50bps cut, and 25% are expecting a 100bps cut, it added.
Arabian Post
10-06-2025
- Business
- Arabian Post
Saudi Oil Flow to China Inches Down Amid OPEC+ Expansion
Saudi Arabia will export about 47 million barrels of crude to China in July, marking a modest decline of one million barrels compared with June allocations. Despite the slight reduction, this remains the third consecutive month of elevated shipments to the world's largest crude importer, underscoring Riyadh's resurgence in securing market share. This shift follows a decision by OPEC+—a coalition of the Organisation of the Petroleum Exporting Countries and key allies—to increase collective oil production by 411,000 barrels per day in July, mirroring identical output hikes in May and June. Within this framework, Saudi Arabia has strategically adjusted its allocations across refiners within China's vast energy landscape. State-owned giants Sinopec and PetroChina, alongside the Aramco-Sinopec joint-venture Fujian refinery, are designated to receive greater volumes in July. Conversely, independent processors such as Rongsheng Petrochemical, Hengli Petrochemical, and Shenghong Petrochemical face reductions. This redistribution highlights a prioritisation of established, integrally linked buyers amid a backdrop of expanding OPEC+ supply. ADVERTISEMENT Although Aramco has yet to comment publicly, the company's allocation strategy aligns with broader pricing adjustments. Saudi Arabia recently reduced the official selling price of its Arab Light grade to Asia for July, setting it at $1.20 per barrel above the Oman/Dubai benchmark—20 cents less than June's pricing and the lowest benchmark since May. This pricing decision reflects two intertwined considerations: increased global supply and sustained domestic demand. Internally, Saudi Arabia ramps up crude consumption for power generation and refinery throughput during the summer months. This seasonal domestic demand can restrict exportable volumes, prompting a more conservative OSP reduction compared with the broader cutbacks anticipated by markets. Meanwhile, the continued output expansion under OPEC+ serves both competitive and geopolitical objectives, helping Riyadh reclaim influence in key markets. OPEC+ members have collectively unwound approximately 1.37 million bpd of previously implemented cuts since April, which form part of an initial 2.2 million bpd reduction plan initiated in early 2025. The restored output aims to counterbalance growing global non-OPEC production and mitigate domestic political pressure—particularly from the US, which has advocated for greater oil supply. Notably, seven other nations in the coalition also agreed to this third consecutive increase, reinforcing OPEC+'s strategic shift towards output recovery. Market analysts indicate that larger increases in crude availability have begun to weigh upon Middle Eastern benchmarks, with the June OSP developments 'less aggressive' than anticipated, partly due to Saudi Arabia's own intensified refinery runs. Global demand dynamics further complicate the outlook, with potential softening in Chinese economic indicators and US-China trade negotiations influencing futures pricing. This recalibrated export approach reflects a nuanced balancing act for Saudi Arabia: securing long-term contracts with major Chinese refiners while managing domestic consumption and contributing effectively to global supply strategies. Analysts point out that the kingdom has largely succeeded. Brent crude futures have remained stable around $65 per barrel, with occasional upward pressure following confirmation of July's OPEC+ increment. ADVERTISEMENT Within China, diversions in allocations have specific implications. State refiners, many with government backing and deeper logistical links to Aramco, stand to gain from increased shipments. Independent refiners, essential drivers of private-sector energy demand, are compelled to source a greater share of crude from alternative suppliers such as Russia, the Middle East, or emerging West African producers. Their reduced access to Saudi barrels may translate to thinner margins amid said competition. Chinese crude throughput data underscores this evolving dynamic. Earlier this year, the nation's refiners reached record-high processing levels—nearing 14.8 million barrels per day—yet faced maintenance schedules and weakening export margins for oil products. These factors have cooled demand from some processors, slightly alleviating pressure on upstream supply chains. Within OPEC+, calls for coherence and strict quota compliance persist. Saudi Arabia has publicly censured members like Kazakhstan for exceeding agreed production levels, underlining Riyadh's insistence on an equitable distribution of output responsibilities. Expectations remain that OPEC+ may complete the unwind of its 2.2 million bpd voluntary cuts by the end of September, though some analysts caution that internal discipline could falter, potentially reshaping future output and pricing trajectories. Against this backdrop, Saudi Arabia's adjusted supply to China illustrates both strategic recalibration and geographic realignment. By trimming shipments marginally from independents, bolstering allocations to state-linked refiners, recalibrating export prices, and synchronising with collective OPEC+ policies, the kingdom is reinforcing its position in a price-sensitive, competitive marketplace. July's allocations represent not a retreat but a fine-tuned manoeuvre in a complex global chessboard. Saudi Arabia is both maintaining influence and responding to evolving domestic and international demands. While Chinese imports continue at robust levels, the marginal dip signals a deliberate redistribution rather than a market-driven contraction.
Time of India
08-06-2025
- Business
- Time of India
OPEC+ giants ramp up additional oil to India; market share nears 78%; supplied 375,000 bpd to India in May
NEW DELHI: India's top four oil suppliers and key members of the OPEC+ alliance, Saudi Arabia, Russia, Iraq, and the UAE have significantly ramped up production and directed a major portion of the additional output to India. Tired of too many ads? go ad free now Their collective market share has reached approximately 78% in India, the world's third-largest oil consumer. These nations have supplied an additional 375,000 barrels per day (bpd) to India in May compared to April, according to energy cargo tracker Vortexa. The collective increase surpassed their committed additional production of 359,000 bpd under Opec+'s output expansion plan of 409,000 bpd. Russia maintained its leading position among India's crude suppliers due to ongoing barrel discounts. In the OPEC+ May supply increase, Saudi Arabia agreed to raise output by 166,000 bpd, Russia by 79,000 bpd, Iraq by 37,000 bpd and the UAE by 77,000 bpd. Their exports to India increased by 135,673 bpd, 114,016 bpd, 66,642 bpd and 58,365 bpd respectively, resulting in market shares of 13.1%, 35.4%, 21.4% and 7.6% in May. Their combined share increased by 8.1 percentage points to 77.5%. African suppliers' share decreased to 4.9% from 11.8%, whilst US crude exports to India reduced to 5.7% from 7%. Saudi Arabia, the largest contributor to the group's supply increase, delivered the highest additional volume to India in May, increasing its market share to 13.1%, a 3% point rise from April. This increase resulted from price reductions offered to Asian purchasers, with Saudi Aramco reducing the May OSP for Arab Light by $2.30 per barrel. The premium has decreased to $1.20 above the Oman/Dubai benchmark for Asian buyers. Tired of too many ads? go ad free now For July loadings, the premium remains at $1.20, after a brief increase to $1.40 for June. "The recent Saudi Aramco's official selling price (OSP) cuts for May loadings, close to four-year low, along with the widening Brent-Dubai Exchange of Futures for Swaps (EFS) made Middle Eastern crude grades more competitively priced than other Brent-linked crudes," Xavier Tang, market analyst at Vortexa said, according to the Economic Times. "Production increases from Saudi Arabia and other OPEC members play an essential role in the Dubai crude price structure," he added. Eight OPEC+ nations have committed to increase output by an additional 411,000 bpd in June and July. The increased supply has affected prices, which have remained between $60-65 per barrel for over two months, significantly below the 2024 average of $80. Saudi Arabia's competitive pricing approach reflects the global competition for India's expanding crude market. "Saudi is offering attractive prices to gain share in India," an Indian refinery executive told the outlet.
Time of India
06-06-2025
- Business
- Time of India
Opec+ giants pump out additional oil to India
Saudi Arabia, Russia, Iraq and the UAE—the heavyweights of the Opec+ producers' alliance and India's top four suppliers—are ramping up oil production and directing most of their additional output to India, boosting their combined market share to nearly 78 per cent in the world's third-largest oil consumer. In May, these four countries supplied 375,000 barrels per day (bpd) more to India than in April, according to energy cargo tracker Vortexa. That's even higher than the 359,000 bpd they had collectively committed to additionally produce under Opec+'s plan to raise output by 409,000 bpd. Saudi Arabia, the biggest contributor to the group's supply increase, delivered the largest incremental volume to India in May, expanding its market share by 3 percentage points over April to 13.1 per cent . The gain was driven by price cuts offered to Asian buyers. Saudi Aramco had cut the May OSP for Arab Light—its flagship grade—by $2.30 per barrel. Competing for Larger Share This has brought down the premium to $1.20 above the Oman/Dubai benchmark for Asian buyers. The premium remains at $1.20 for July loadings, after briefly rising to $1.40 for June. 'The recent Saudi Aramco's official selling price (OSP) cuts for May loadings—close to four-year lows—along with the widening Brent-Dubai Exchange of Futures for Swaps (EFS) made Middle Eastern crude grades more competitively priced than other Brent-linked crudes,' said Xavier Tang, market analyst at Vortexa. 'Production increases from Saudi Arabia and other OPEC members play an essential role in the Dubai crude price structure.' Saudi Arabia's aggressive pricing strategy comes as global suppliers compete for a larger share of India's growing crude market. 'Saudi is offering attractive prices to gain share in India,' an Indian refinery executive told ET. China, despite having a much larger oil market, has seen demand slow as buyers increasingly shift to electric vehicles, he added. Russia retained the top position among India's crude suppliers, thanks to continued discounts on its barrels. As part of the OPEC+ May supply boost, Saudi Arabia had agreed to increase output by 166,000 bpd, Russia by 79,000 bpd, Iraq by 37,000 bpd and the UAE by 77,000 bpd. Their respective exports to India rose by 135,673 bpd, 114,016 bpd, 66,642 bpd and 58,365 bpd. This translated into market shares of 13.1 per cent , 35.4 per cent , 21.4 per cent and 7.6 per cent in May. Collectively, their share rose 8.1 percentage points to 77.5 per cent . These gains came at the expense of African suppliers, whose share in India's crude imports fell to 4.9 per cent in May from 11.8 per cent in April. US crude exports to India also declined, reducing its share to 5.7 per cent from 7 per cent . Eight OPEC+ countries have agreed to raise output by another 411,000 bpd in June and again in July. The rising supply has put pressure on prices, which have hovered between $60-65 per barrel for more than two months, well below the 2024 average of $80.
