Oil prices might not recover soon. Here’s what that means for Saudi Arabia’s ambitious transformation plans

Commodity

Summary:

Falling oil prices threaten Saudi Arabia’s Vision 2030 projects, risking delays and larger fiscal deficits. Though vulnerable, the Kingdom’s low production costs and strong fiscal position offer resilience against prolonged market weakness.

Oil markets have slumped in recent weeks over fears of a trade war between the US and China and a surprise decision by OPEC+ countries to increase output in May. That could spell trouble for some oil-dependent Middle Eastern economies.

On April 8, oil futures slid to a four-year low as investors priced in the possibility of a recession, driven tensions between the world’s two largest economies. Although prices have risen slightly since then, a bigger recovery may not happen soon. Goldman Sachs said on April 13 that it expects oil prices to decline through 2025 and 2026, with Brent crude averaging $63 a barrel for the rest of the year, and even lower next year.

The next day, JP Morgan slashed its oil price forecasts to $66 for Brent in 2025, and a target of $58 for 2026.

Lower oil prices are “bad news” for oil exporters in the Middle East and North Africa (MENA), says Tim Callen, a visiting fellow at the Arab Gulf States Institute in Washington. He adds that Saudi Arabia, Oman and Bahrain will feel the most pain, with countries like the United Arab Emirates, Qatar and Kuwait less affected.

Of all Middle Eastern economies, Saudi Arabia’s is the “most vulnerable” to low oil prices, James Swanston, Middle East and North Africa Senior Economist at Capital Economics, told CNN.

The country is the world’s top oil exporter. The commodity accounted for 60% of government revenue in 2024, with crude oil and natural gas accounting for more than 20% of the country’s GDP over the same period.

A per barrel price of above $100 is required for the country to balance its budget, Swanston said.

Callen, who is the former International Monetary Fund chief to Saudi Arabia, estimates that with oil at $60 a barrel, Saudi Arabia’s fiscal deficit would be $62 billion, more than double the $27 billion estimated in its annual budget.

An oil-funded transformation

Across the region, governments are utilizing oil revenues to diversify their economies.

In Saudi Arabia, several initiatives dubbed “giga-projects” are key to the country’s Vision 2030 plan. That includes the futuristic city of NEOM, intended to be a hub for everything from manufacturing to media. The first phase will cost hundreds of billions of dollars, according to its crown prince.

Other initiatives include the development of luxury tourism destinations along the country’s Red Sea coast, and Qiddiya, an entertainment city on the outskirts of Riyadh. Since 2016, $1.3 trillion in real estate and infrastructure projects have been unveiled, according to Knight Frank’s Saudi Arabia Giga Projects Report.

Experts say that some giga-projects may now face delays, if the country cuts back its capital expenditure.

Saudi Arabia’s finance ministry did not respond to a request for comment. Its sovereign wealth fund, the Public Investment Fund (PIF), which is behind Neom and the Red Sea tourism plans, did not respond to a CNN email.

Infrastructure needed for major international events may get priority. The country plans to host the 2029 Asian Winter Games, the 2030 World Expo, and the 2034 FIFA World Cup.

Tensions within OPEC

In recent years, Saudi-led OPEC has limited output to boost oil prices, holding Brent crude oil to largely $70 to $90 per barrel. But there have been tensions within the membership and wider OPEC+ group, with countries like Kazakhstan and Iraq exceeding their production quotas — and the issues don’t appear to be resolved.

The organization’s April 3 output-increase announcement may have been intended to punish overproducers, experts say. In mid-April, OPEC released a plan to compensate for overproduction. But last week, Kazakhstan’s energy minister told Reuters that national interests would take priority over those of OPEC+. His comments drove a decline in prices, and he later issued a statement saying the country is committed to work with the group.

The continued flouting of production quotas could keep oil prices sagging, even after US President Donald Trump signalled a potential U-turn on his trade war with China.

Lower oil prices could mean that Saudi Arabi’s diversification away from an oil takes longer than planned, says Swanston.

Callen says that Saudi is still in an “enviably strong” fiscal position with relatively low public debt levels. The Kingdom can deal with lower oil prices by cutting back spending and borrowing more, he adds. “Not ideal for Saudi, but very manageable.”

Swanston says that Saudi Arabia has some of the lowest oil production costs in the world, and that the country may be able to withstand price levels that those with higher costs cannot. “Their cost of production is minuscule,” says Swanston. “They can weather lower prices.”

source : edition.cnn

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Jason

Economic

Stocks

The tech-heavy Nasdaq led declines, as megacap stocks lost ground. Tesla (TSLA.O), fell 3.2% and AI-darling Nvidia (NVDA.O), dipped 3.6%.

A report said China's Huawei Technologies was preparing to test its artificial-intelligence processor, which it hopes would replace some of Nvidia's products.

Other megacaps also fell, ahead of a busy week of corporate earnings.

Apple (AAPL.O), and Meta Platforms (META.O), are among the several "Magnificent Seven" heavyweight companies that will be reporting this week.

"We're going to have to live with higher volatility in the (tech) sector for a while, unless we get some really impressive de-escalation of the trade with China situation," said Bill Sterling, global strategist at GW&K Investment Management.

With 180 S&P 500 companies preparing to report results this week, investors will be watching for indications on how U.S. President Donald Trump's new tariffs could impact the outlook of the companies.

Though first-quarter earnings from S&P 500 companies are expected to climb 9.7% from a year ago, according to LSEG IBES, many firms have flagged the uncertainty caused by the U.S. trade policy, with some cutting or pulling annual forecasts.

Crucial economic data, including the monthly U.S. payrolls and the personal consumption expenditures price index, is also on the roster.

At 11:43 a.m. ET, the Dow Jones Industrial Average (.DJI), fell 2.29 points, or 0.01%, to 40,111.21, the S&P 500 (.SPX), lost 25.33 points, or 0.46%, to 5,499.87 and the Nasdaq Composite (.IXIC), lost 155.44 points, or 0.89%, to 17,227.50.

Gains in Boeing (BA.N), after Bernstein's rating upgrade limited losses for the Dow, while the technology sector (.SPLRCT), fell 1.3%, leading sector declines.

Trading was volatile, with the S&P 500 and the Nasdaq briefly touching their highest levels since April 2, prior to Trump's "Liberation Day" tariff announcement.

Signs that the U.S. and China could be willing to de-escalate trade tensions had injected some optimism in markets last week, with the three main indexes ending Friday with weekly gains.

Though markets have welcomed signs that the U.S. is softening its stance, it is too soon to tell what the outcome of any negotiations would be, Sterling said.

A lack of clarity on the negotiations between the two countries has kept the market on edge.

The S&P 500 (.SPX), remains over 10% off its February record high, as markets assess the potential impact of tariffs.

A majority of economists polled by Reuters said the risks of the global economy slipping into recession this year were high.

Spirit AeroSystems (SPR.N), rose 2.6% after Airbus (AIR.PA), reached a deal to take over some of the company's plants.

Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the NYSE. Declining issues outnumbered advancers by a 1.27-to-1 ratio on the Nasdaq.

The S&P 500 posted three new 52-week highs and one new low, while the Nasdaq Composite recorded 33 new highs and 30 new lows.

Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Devika Syamnath and Shinjini Ganguli

Source: Kitco

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Economic

Treasury Secretary Scott Bessent on Monday said many top trading partners of the United States had made 'very good' proposals to avert U.S. tariffs, and one of the first deals to be signed would likely be with India.

Speaking to reporters after two early morning television interviews, Bessent said the first such trade agreement might come this week or next, but gave no further details.

Bessent told Fox News' "FOX and Friends" that President Donald Trump will be "intimately involved" in each of the bespoke trade deals with each of 15 to 18 important trading partners, but it will be important to reach agreements in principle soon.

"I would guess that India would be one of the first trade deals we would sign," Bessent told CNBC, adding that the U.S. had also held very substantial negotiations with Japan and discussions with other Asian trading partners were going well.

Trump has upended the global trading system with a spate of tariffs since taking office. These include a blanket 10% tariff on most countries except Canada and Mexico, and new tariffs totalling 145% on goods from China, which has responded with its own counter-measures. Higher U.S. tariffs on dozens of countries are due to take effect on July 8 unless deals are reached before a 90-day pause ends.

A Treasury spokesperson declined to provide any further details on the ongoing negotiations.

Bessent, who held dozens of talks with visiting officials during last week's meeting of the International Monetary Fund and World Bank, will likely face more questions on the trade talks when he joins a regular White House briefing on Tuesday to tout Trump's record over the first 100 days of his second term.

"Vice President Vance was in India last week, talked about substantial progress. I have mentioned that the negotiations with the Republic of Korea have gone very well, and I think we've had some very substantial negotiations with our Japanese allies," he told CNBC.

Talks have been ongoing, but no deals have been announced, underscoring the complexities of reaching agreements during the short 90-day period.

India is also working a bilateral trade deal with Britain, with their top trade officials starting two days of talks aimed at concluding more than three years of negotiations.

A government official in South Korea on Monday ruled out that Seoul would agree to a comprehensive trade agreement with Washington before a presidential election on June 3, and raised questions whether a deal could be reached before early July.

Elections in Japan in July could also complicate those talks, although some analysts expect Japanese Prime Minister Shigeru Ishiba and Trump to announce an agreement when they meet at the G7 summit in Canada in June.

Bessent told CNBC that China's recent moves to exempt certain U.S. goods from its retaliatory tariffs showed that it wanted to de-escalate trade tensions with the United States, and noted that the U.S. had refrained from escalating by embargoing those goods.

Asked whether he planned to call his Chinese counterpart to jump-start negotiations between the world's two largest economies, Bessent told Fox News: "We'll see what happens with China. It's important. I think it's unsustainable from the Chinese side. So maybe they'll call me one day."

He earlier told CNBC that "all aspects of government are in contact with China," and underscored that it was up to China to reduce tensions since they sold five times more goods to the U.S. than vice versa.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Forex

U.S. Dollar Index Declines As Dallas Fed Manufacturing Index Misses Estimates

DXY 280425 4h Chart

U.S. Dollar Index pulls back as traders react to Dallas Fed Manufacturing Index report. The report showed that Dallas Fed Manufacturing Index decreased from -16.3 in March to -35.8 in April, compared to analyst forecast of -15.

The nearest support level for U.S. Dollar Index is located in the 98.80 – 99.00 range. A move below the 98.80 level will push U.S. Dollar Index towards the next support at 97.50 – 97.70.

EUR/USD Attempts To Settle Above 1.1400

EUR/USD 280425 4h Chart

EUR/USD gains ground as traders bet that U.S. – China trade war will put material pressure on the American currency.

In case EUR/USD settles above the 1.1400 level, it will head towards the nearest resistance, which is located in the 1.1450 – 1.1470 range.

GBP/USD Tests Resistance At 1.3400 – 1.3420

GBP/USD 280425 4h Chart

GBP/USD tests resistance at 1.3400 – 1.3420 as traders focus on general weakness of the American currency.

If GBP/USD manages to settle above the 1.3420 level, it will move towards the next resistance at 1.3485 – 1.3500.

USD/CAD Stays Range-Bound

USD/CAD 280425 4h Chart

USD/CAD is mostly flat despite the pullback in the oil markets. Other commodity-related currencies are moving higher in today’s trading session.

If USD/CAD settles above the 1.3900 level, it will get to the test of the resistance at 1.3930 – 1.3950. A move above 1.3950 will push USD/CAD towards the resistance at 1.4030 – 1.4050.

USD/JPY Pulls Back As Treasury Yields Fall

USD/JPY 280425 4h Chart

USD/JPY pulls back as traders focus on falling Treasury yields. The yield of 2-year Treasuries pulled back towards 3.70%, while the yield of 10-year Treasuries settled near the 4.24% level.

In case USD/JPY settles below 142.50, it will get to the test of the nearest support at 141.50 – 142.00. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum in the near term.

Source: fxempire

Risk Warnings and Disclaimers

Add to Favorites

Catherine Richards

Cryptocurrency

Political

Crypto users betting on the outcome of the snap election to determine the next Prime Minister of Canada appear to be favoring a Liberal Party victory as residents head to cast their votes.

As of April 28, cryptocurrency betting platform Polymarket gave current Canadian Prime Minister and Liberal Party candidate Mark Carney a 79% chance of defeating Conservative Party candidate Pierre Poilievre in the race for the country's next PM. Data from the platform showed users had poured more than $75 million into bets surrounding the race, predicting a Poilievre or Carney victory.

Polymarket chances favor the Liberal Party's Mark Carney over the Conservative Party's Pierre Poilievre to be the next Canadian Prime Minister.

The odds suggested by the platform, as well as those from many polls, show a nearly complete reversal of fortunes between the two candidates after former Prime Minister Justin Trudeau resigned in January. Trudeau and, by association, many in the Liberal Party, faced criticism over the handling of Canada's housing crisis and questions about how he would face US President Donald Trump's then-proposed tariffs.

Following Trudeau's resignation, Trump stepped up rhetoric disparaging Canada, repeatedly referring to the country as the US's “51st state” and Trudeau as its “governor.” The US President also imposed a 25% tariff on goods imported from Canada in March. The policies seem to have led to increasing anti-Trump sentiment in Canada, with many residents booing the US national anthem at hockey games and making comparisons between the president and Poilievre.

Source: CryptoSlate

Risk Warnings and Disclaimers

Add to Favorites

Adam

Commodity

Futures Slip as Traders Eye Global Economic Signals

Daily Light Crude Oil Futures

Light crude oil futures are trading slightly lower Monday, holding just below a critical pivot level at $63.06. Price action suggests a downside bias is forming, with the next potential support target at $59.67 if selling pressure intensifies. Resistance stands near last week’s high of $64.87, followed by the 50-day moving average at $66.05. The technical setup points to cautious sentiment, with the market at risk of deeper retracements if external pressures persist.

Economic Uncertainty and OPEC+ Supply Concerns Weigh on Oil

Oil markets today are grappling with broad macro uncertainty. Conflicting signals on U.S.-China trade negotiations continue to cloud the outlook for global growth and fuel demand. Analysts highlight the trade war’s dominant role over nuclear talks with Iran or internal OPEC+ tensions. Investors remain sensitive to headlines, with any sign of thawing trade relations seen as a potential catalyst for buying interest. Meanwhile, expectations that OPEC+ could accelerate production hikes at its upcoming May 5 meeting are adding to supply-side pressure.

China’s Crude Imports Surge, But Demand Questions Remain

Fresh data shows China’s crude surplus rose sharply in March, reaching 1.74 million barrels per day—the highest in nearly three years. This came despite a 0.4% year-over-year increase in refinery processing rates, supported by record domestic production. Imports surged 5% year-over-year, led by Iranian and Russian barrels, as Chinese refiners stocked up ahead of anticipated U.S. sanctions. However, questions remain whether this March strength reflects sustainable demand growth or temporary stockpiling against falling global prices.

Political Risk Grows With Iranian Tensions

Adding to the market’s geopolitical risks, a deadly explosion at Iran’s Bandar Abbas port over the weekend further stoked uncertainty. While nuclear talks between Iran and the U.S. continue, Iranian officials expressed doubt over reaching a resolution. Any escalation in Middle East tensions could quickly ripple through oil markets, particularly if supply chains are disrupted.

Market Forecast

Given technical weakness under key moving averages, ongoing trade war tensions, and signs of elevated Chinese stockpiling rather than organic demand growth, the short-term outlook for oil remains bearish. Traders should monitor developments around U.S.-China talks, OPEC+ decisions, and Middle East stability for potential catalysts.

Source: fxempire

Risk Warnings and Disclaimers

Add to Favorites

Devin

Economic

A gauge that tracks emerging stocks gained 0.55% and is trading near the highest level since the day after President Donald Trump presented his reciprocal tariffs. The MSCI Index leaped 3.4% last week.

The upward movement “seems to be driven by some optimism regarding a potential de-escalation of Trump’s tariffs,” said Gordian Kemen, head of emerging markets sovereign strategy at Standard Chartered.

Monday’s gains also put the EM stocks index above its 200-day moving average. If the gauge ends April with an advance, that would mark a gain in each of the first four months of a year — a feat last achieved in 2019. Earnings estimates for the gauge have risen 0.8% this month, the most since August.

For Michael Brown, a senior research strategist at Pepperstone Group Ltd, the recent EM rally has been largely driven by the broad “sell America” trade amid policy uncertainty from Trump. Those countries that reach trade deals with the US — which result in a permanent lowering of tariffs — are likely to outperform peers.

Meanwhile, in the foreign exchange market, currencies are trading mixed, with the MSCI currency index up just 0.1%. The South African rand and Argentina’s peso led the gains in the emerging basket, while the Chilean peso lagged its peers.

Earlier, assets in Colombia dropped after the International Monetary Fund paused access to an $8.1 billion flexible credit line. The country’s peso plunged as much as 0.8% while its dollar bonds fell across the curve, with notes maturing in 2035 down 1 cent to about 100 cents on the dollar

Trade Watch

Hopes have grown that the worst of the US tariff threat may be passing after Treasury Secretary Scott Bessent said last week that the US and South Korea could reach an “agreement of understanding” on trade as soon as this week. Bessent said Sunday that negotiations with some trading partners “are moving along very well, especially with the Asian countries.”

Traders this week will also be watching for key US data including growth and a gauge of inflation to assess if Trump’s trade war has begun to affect the economy. Meanwhile, Chinese officials Monday reiterated a pledge to aid growth ahead of the release of factory activity data later this week.