KUWAIT CITY, Oct 12: Kuwait Integrated Petroleum Industries Company (KIPIC) aims to raise its profits for fiscal 2025/2026 by increasing its sales in local and international markets, which have been robust since the beginning of the year, say reliable sources. Sources pointed out that KIPIC recovered from the losses it suffered in previous years through the growth of its net profits, which amounted to about KD52.2 million in the 2024/2025 budget. They cited five main factors behind this growth.

First is the increase in the refining capacity of Zour Refinery, which reached 615,000 barrels per day in May 2024, ranking seventh globally in terms of production quantities. They explained that the refining capacity of the refinery in the years prior to its operational opening ranged between 205,000 and 410,000 barrels per day. The second factor behind KIPIC’s profit growth over the past year is the commencement of the merger of oil companies, particularly the merger of KIPIC into the Kuwait National Petroleum Company (KNPC), to shake off the losses.

The third factor is the result of the implementation of the spending rationalization policy pursued by the CEO of KNPC, who also serves as the acting CEO of KIPIC, Wadha Al-Khatib. The KNPC spending rationalization committee implemented spending rationalization last year, achieving financial savings for KIPIC estimated at KD27 million through this approach. Sources explained that the implementation of rationalization coincided with the provision of better products. The fourth factor is the focus on stimulating KIPIC’s sales in global markets by opening new markets. In the first half of 2025, the company was able to expand its sales of sulfur and diesel, in addition to producing the best type of low-sulfur jet fuel, and then exporting all of its products that comply with international requirements.

The fifth factor is the company’s interest in digital transformation, focusing on developing all aspects related to global technologies, including artificial intelligence, as these technologies are extremely useful in detecting and anticipating errors before they occur, which contributes to stable production. Sources added that there are other important factors behind KIPIC’s profitability, such as the signing of numerous contracts with international companies specializing in smart energy, renewing contracts with the largest global platforms related to technological development in the field of oil refining, and strengthening relationships with major refining companies to mutually benefit from each other’s expertise.

By Najeh Bilal Al-Seyassah/Arab Times Staff

Gold prices surge for eighth straight week on global economic uncertainty.

KUWAIT CITY, Oct 12: Gold prices surged to a historic high, closing last week at $4,017 per ounce, marking an eighth consecutive week of gains, driven by the ongoing US government shutdown and renewed trade tensions between Washington and Beijing, according to a report from Kuwait’s Dar Al-Sabayek Company.

Gold futures for December delivery climbed 0.7 percent, or approximately $29, contributing to a weekly increase of 2.5 percent. The report cited fresh trade war fears following US President Donald Trump’s threat to impose additional tariffs on China, accusing Beijing of restricting exports of rare earth elements. This escalation intensified concerns over a slowdown in global trade amid the US shutdown, now entering its tenth day, boosting investor demand for safe-haven assets like gold.

Signs of a slowing US economy are emerging, with consumer confidence stabilizing according to the University of Michigan, while investors await the Consumer Price Index report due on October 24. The data is expected to influence the Federal Reserve’s decision on a possible 25 basis point interest rate cut at the month’s end.

Supporting the rally, US 10-year Treasury bond yields fell to 4 percent, while rising geopolitical tensions in France, Japan, and the Middle East have further increased demand for gold as a risk hedge.

Gold-backed exchange-traded funds saw record inflows of around 228 tons in Q3, valued at nearly $26 billion, reflecting strong investor confidence. The World Gold Council noted a 52 percent increase in gold investments since the start of 2025, while silver prices jumped over 70 percent, surpassing $50 per ounce.

Goldman Sachs has raised its 2026 gold price forecast from $4,300 to $4,900 per ounce, citing aggressive central bank buying and weak confidence in the US dollar. Despite potential short-term technical corrections, the report stated that inflation, high government debt, and declining faith in global monetary policies will keep gold attractive for hedging.

In Kuwait’s local market, 24-karat gold reached about KWD 39.94 ($121) per gram, while 22-karat gold was priced at approximately KWD 36.6 ($111) per gram. Silver recorded around KWD 560 ($1,836) per kilogram.

The troy ounce, the standard unit for precious metals, equals 31.103 grams.

Oil prices are unsatisfactory for producers… that much is certain. Currently trading at $63 per barrel, prices are down $3 from last week, with no signs of improvement in the coming weeks. This decline comes as producers continue to increase supply, which is further weakening the price.

So why are oil producers flooding the market with more barrels despite the lack of real demand? Much of the additional supply is being directed to strategic reserves in countries like China and the United States. These weak prices are negatively impacting oil-producing countries, many of which rely on oil revenues for more than 85 percent of their annual budgets. The resulting deficits are forcing some of them to borrow from international banks. The alternative of selling national assets raises a difficult choice – borrow or sell? For most oil-producing countries in the Arabian Gulf, borrowing appears to be the preferred option over selling off overseas investments.

Keeping these investments intact allows them to generate long-term returns and enhance financial portfolios. This seems to be the best choice for Kuwait. Other oil-producing countries may opt to sell a part of their assets to generate the cash needed, while retaining majority ownership and control at home. In reality, there are few other options available. Alternatively, nations could begin exploring and investing in a long-term replacement for oil. This is a complex and time-consuming process, but one that must be pursued, especially in Kuwait, as more than 95 percent of the national income depends on oil.

At today’s price of $63 per barrel, Kuwait faces a full budget deficit, given that the current budget requires an oil price of $92 per barrel to break even. Without reaching this breakeven level, we will continue to face deficits, forcing us to turn to foreign banks for short-term loans. This could remain the case for several years — or until oil prices rise sufficiently to stabilize the national budget.

At today’s oil price of $63 per barrel, we are facing a total budget deficit, as our budget requires $92 per barrel to break even. Without reaching this breakeven price, we will continue to run deficits and may need to seek short-term loans from foreign banks. This could be the case for several years or until oil prices rise to the necessary level to balance our budget. In the meantime, Kuwait needs to find new sources of income generating between KD 10-15 billion annually. Relying solely on our sovereign wealth fund is neither sufficient nor sustainable in the long term, as our cash reserves from overseas investments will only last a few years, especially at the current oil price of $63 per barrel. The solution lies in combining income from oil with new revenue streams to bridge the gap between oil income and other sources. This is a hypothetical scenario aimed at securing additional long-term income.

To achieve this, a specialized committee should be formed, consisting of top experts in finance, banking, and commerce to create a think tank focused on finding alternatives to oil. Given the current low oil price and the budget’s need for $92 per barrel to break even, the gap is significant, and deficits could reach around KD 5 billion by the end of March 2026.

The numbers are alarming, and tightening our belts and budgets is one way to reduce expenses. However, this seems nearly impossible as we must create new jobs, meet expansion plans, and improve our infrastructure. In the long term, we need to seek international expertise to identify alternative sources of income. With low oil prices expected to persist for years, borrowing is not the solution. Finding alternatives to oil revenue is the real solution.