Saudi Arabia Oil & Gas Q4 2019
The outlook for Saudi Arabia's oil sector looks more clouded over the coming two to three years. In the face of toughersanctions measures on Iran, oil prices have remained weak due to mounting concerns for the global economy amid rising tradetensions. Global demand growth is also slowing, putting pressure on OPEC to reduce its output to match consumption. We havedowngraded our short-term oil production forecast to reflect this altered market balance and to allow for a rollover of the OPEC+production cut deal to the end of 2020. The outlook for gas production remains bullish, with the kingdom progressing a number ofprojects, including a major expansion at Hawiyah. Downstream capacity is also expanding, with Jazan set to reach full capacity in2019, boosting both domestic supply and exports. Oil demand growth, though, remains weak, dragged down by softer-than-expected economic activity and the aftershock of fuel subsidy reforms. Gas demand continues to grow strongly but is capped bydomestic supply constraints and the lack of import alternatives.
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