Oil Prices Today: Their Movements and Impact on the Saudi Market

Today's oil prices refer to the immediate value of a barrel of crude oil in global markets, typically measured through two main types: Brent crude and West Texas Intermediate (WTI). Oil represents a strategic global commodity whose price is influenced by supply and demand forces, geopolitical crises, and developments in the economic policies of major countries. In the Saudi context, today's oil prices gain exceptional importance due to the Kingdom's reliance on oil revenues as a primary source of GDP and government income. The movement of oil prices is closely linked to the indicators of the Saudi stock market, as the results and profits of major listed companies, such as Aramco and SABIC, are affected by price movements. Furthermore, rising or falling oil prices reflect on market liquidity, investment volume, and investor confidence, making monitoring and tracking them essential for anyone following the Saudi financial market.

Today's oil prices are influenced by several interrelated factors that change continuously. Firstly, global demand growth or slowdown plays a pivotal role, as increased demand from major economies like China and the United States raises prices, and vice versa. Secondly, OPEC+ decisions regarding production cuts or increases directly affect global oil supply. Thirdly, geopolitical events such as regional conflicts, economic sanctions on producing countries, or production incidents (like fires or facility closures) often lead to sudden price fluctuations. Additionally, oil inventory reports, macroeconomic developments (inflation, interest rates), and the movement of the U.S. dollar all contribute to shaping today's oil prices. In recent years, shifts towards renewable energy and changes in climate policies have emerged as additional influencing factors.

Throughout 2024 and into early 2025, today's oil prices recorded clear fluctuations, with peaks nearing $100 per barrel at certain times and declines touching $70-75. These movements were linked to ongoing political tensions, OPEC+ policies, and the state of the global economy. By late 2024, Brent crude prices stabilized around $80-85 per barrel, while WTI hovered around $75-80. Reports from the U.S. Department of Energy and international energy organizations indicated continued global demand growth, reaching approximately 102 million barrels per day by early 2025, while Saudi Arabia maintained its daily exports at 9-10 million barrels, supported by an average selling price of around $75-80. This illustrates the ongoing impact of seasonal factors and production cut decisions in maintaining relative price stability during this period.

Today's oil prices play a pivotal role in shaping the performance of the Saudi stock market (Tadawul), particularly in energy-related sectors. When oil prices rise, profits for major energy companies like Aramco and SABIC increase, supporting their stock prices and enhancing the overall TASI index. Additionally, rising oil prices boost government revenues, positively impacting public spending and infrastructure projects, thus influencing overall economic activity. Conversely, falling oil prices lead to reduced profits for oil companies and may result in declining market indices and liquidity. It is noted that the general index of the Saudi market reacts quickly to any significant change in today's oil prices, due to the substantial weight of energy companies in the local market.

Saudi Aramco represents the largest publicly traded oil company in the world and serves as a key indicator of the energy sector's performance in the Kingdom. By the end of 2024, Aramco's stock price was trading between 45 and 48 riyals, with a market value of approximately 8.7 trillion Saudi riyals, making it one of the largest companies globally. The price-to-earnings (P/E) ratio was around 25 times, while the cash dividend yield ranged between 10% and 12% during 2024 due to high profits in previous years. Despite a net profit decline of 40-50% in the third quarter of 2024 compared to the same period in 2023, Aramco continued to achieve strong revenues and distribute generous dividends to shareholders. Typically, Aramco's results are directly linked to movements in today's oil prices, as any increase in prices leads to higher revenues and profits for the company.

The oil and energy sector in the Kingdom of Saudi Arabia encompasses exploration, production, refining, and petrochemical manufacturing activities. Saudi Arabia is one of the largest oil producers in the world due to its vast reserves and low production costs. The Kingdom adheres to organized production policies in cooperation with OPEC+ to regulate global supply and support prices. In recent years, Saudi Arabia has continued to inject substantial investments into developing oil fields and refineries both domestically and internationally. The sector is also witnessing increasing diversification as Aramco expands into petrochemical industries and joint international projects, aligning with the Kingdom's Vision 2030 aimed at reducing dependence on crude oil and increasing value-added across the sector.

Competition within the Saudi energy sector is intensifying among several listed companies such as Aramco, SABIC, and refining and petrochemical companies like YASREF and Safco. Additionally, the Saudi market is experiencing growth in alternative energy and electricity companies that are indirectly affected by oil prices. On an international level, Saudi Arabia faces competition from major producers such as the United States (shale oil), Russia, the UAE, Iraq, and Iran. The Kingdom is keen to maintain its global market share through production development, refining investments, and expanding international partnerships, while closely monitoring shifts in global energy sources.

Fluctuations in today's oil prices play a prominent role in determining the trajectory of the Saudi economy. Rising prices increase government revenues, enhance cash reserves, and allow for increased spending on development projects and Vision 2030. However, sharp declines exert pressure on the public budget, pose the risk of financial deficits, and reduce profits for energy companies. Although the Saudi economy is witnessing increasing diversification away from oil, the direct impact of oil price changes remains significant, especially as the sector continues to be a fundamental pillar of GDP and exports.

OPEC+ plays a crucial role in regulating today's oil prices through production policies. In 2024, OPEC+ decided to extend production cuts to address the pressures of declining demand and market fluctuations. Saudi Arabia typically leads these policies with voluntary cuts aimed at supporting prices and maintaining market stability. In November 2024, OPEC+ announced an additional reduction of about 2 million barrels per day starting in 2025. These policies directly affect the size of global supply, reflecting on spot oil prices and futures contracts, ultimately impacting the profits of oil companies and oil-dependent economies.

The year 2024 witnessed ongoing regional tensions in the Middle East, in addition to the Russian-Ukrainian conflict and Western sanctions on Russia and Iran. These events caused periods of rising today's oil prices due to fears of global supply disruptions. Additionally, developments in the U.S. oil market (shale oil) sometimes contributed to increased supply. Any news about disruptions or incidents in production and refining facilities worldwide remains one of the most immediate drivers of prices. Furthermore, statements from major producers, especially from Saudi Arabia and OPEC, play a role in calming or increasing market volatility.

Saudi Arabia has announced major projects in renewable energy as part of Vision 2030, such as NEOM for green energy and wind energy. This shift aims to diversify energy sources and reduce dependence on crude oil. Although oil still constitutes the largest part of the energy mix in the Kingdom and globally, increasing investments in clean energy are beginning to play a role in market policies. In the long term, this may alter price dynamics, but for now, the impact of this shift remains relatively limited compared to the influence of traditional factors such as supply and demand.

To accurately monitor today's oil prices, one can refer to official sites like Tadawul for data on the Saudi stock market, global news agency websites like Bloomberg and Reuters, and reports from the Saudi Capital Market Authority (CMA). These sources provide real-time data, analyses, and forecasts based on the latest developments. Additionally, major companies like Aramco publish quarterly reports on their financial results, which indirectly reflect the impact of oil price movements. It is important for investors to rely on official and trustworthy sources to avoid making investment decisions based on inaccurate information.

The Kingdom of Saudi Arabia has adopted several policies to manage the effects of fluctuations in today's oil prices, most notably diversifying the economy through Vision 2030, building strong cash reserves, and developing the Public Investment Fund. Saudi Arabia also maintains very low production costs, enabling it to achieve profits even when prices decline. Furthermore, the Kingdom continues to collaborate closely with OPEC+ to regulate production and manages its financial policies cautiously to mitigate the impact of oil shocks, such as controlling government spending and developing new sources of income outside the oil sector.

International organizations' forecasts indicate that global demand for oil will continue at a moderate pace in 2025, with expectations of price stability in the range of $75-85 per barrel if OPEC+ policies remain stable and no major supply crises occur. Conversely, the shift towards renewable energy and environmental pressures remain long-term influencing factors, but it is not expected that they will fully replace oil in the near future. Saudi Arabia will remain a key player in the global oil market, benefiting from its large production capabilities and flexible policies in response to rapid market changes.