The drone attacks in the heart of Saudi Arabia’s oil industry have sent reverberations around the world. The large petroleum processing facilities as well as a nearby oil field, both operated by energy giant Aramco, together account for 50% of Saudi Arabia’s oil output, thus knocking out around 5% of global daily oil petroleum production. This led to the biggest oil price jump since 2008, ending the day nearly 15% higher, with the brand benchmark seeing its steepest climb in around 30 years. But prices fell back after President Trump vowed to release US reserves.
Global steel demand is expected to continue to increase in 2019 and 2020, but growth rates are thought likely to moderate in tandem with a slow global economy. Uncertainty in the trading environment and volatility in the financial markets have not yet subsided and could pose downside risks to this forecast. The World Steel Association projects global steel demand will reach 1.735 billion tonnes in 2019 for an increase at 1.3% over 2018, while growth of 0.9% to 1.752 billion tonnes is expected for 2020. So growth is still anticipated, but in a less favourable economic environment.
In the Middle East, indeed, steel demand is expected to contract by 2.6% to 48.9 million tonnes in 2019, with a 1.2% recovery to 49.5 million tonnes foreseen for 2020.
The US-China trade war is threatening Indian markets as China looks for alternative outlets for its steel exports, according to India’s steel ministry. Faced with low exports and higher imports, India’s steel ministry has been pushing for an increase in import duties. China’s economic deceleration, the slower global economy and uncertainty surrounding the trade and political situation in many regions suggest a possible moderation in business confidence and investments.
However, there are concerns that escalating tensions in the Gulf region could pose a broader risk, potentially threatening to disrupt oil traffic through the key Strait of Hormuz - the narrow waterway through which around a fifth of the world’s oil moves, connecting producers with the international markets.
Sharif Metals Ltd (ARE), Representative of the BIR Young Traders Group