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Daily Economic Update
23.10.2025
Oil: Prices gain after US imposes sanctions on Russia’s largest oil producers. Brent posted its largest gain in almost a month yesterday, rising 2.5% d/d to $62.6/bbl after President Trump announced sanctions on Russia’s largest oil firms Rosneft and Lukoil in order to put further pressure on President Putin to end the war in Ukraine. Prices also found support earlier in the day from a larger-than-expected decline in US petroleum inventories, suggesting that US oil consumption was holding up, and on the news that the US and India were nearing a trade deal that could see Indian refiners reduce their imports of heavily discounted Russian crude in favor of likely costlier alternatives. Prices were up again this morning in Asian markets at the time of writing (+3.2%) on the expectation that the EU would sign off on another round of sanctions on Russia. This lines up Brent for a potential third consecutive day of gains and to close the week higher for the first time this month. It is yet unclear whether President Trump’s sanctioning of Russia’s largest oil producers will be significant in terms of reducing Russian oil flows or, more importantly, bringing the Ukraine conflict to an end – which is why the president intends to back up these sanctions with conversations with both China and India, Russia’s two main oil customers. It remains to be seen, however, whether this latest salvo is more than just posturing and leveraging ahead of mooted meetings with any of the above protagonists, but the move does represent something of U-turn in the US president’s thinking towards Russia, which up until this point has been to refrain from more aggressive policies.
UK: Inflation unchanged at 3.8% in September, puts BoE December rate cut back on the table. CPI inflation in September was unchanged at 3.8% y/y for the third straight month, undershooting both the Bank of England (BoE) and the consensus forecast of 4%. Core inflation also unexpectedly eased to 3.5% from 3.6% in August, the lowest since May. On a monthly basis, both headline and core prices were flat (0% m/m). While goods inflation accelerated to a nearly two-year high of 2.9% y/y from August’s 2.8%, generally stickier services inflation was unchanged at 4.7% versus the BoE forecast of 5% amid broadly softening wage growth and a weaker labor market. A hold on the policy interest rate at next month’s MPC meeting continued to be the base case, but given the milder-than-expected CPI, the futures market boosted bets for a 25-bps interest rate cut at the December meeting to over 60% from below 50% prior to the inflation release while the GBP and yields on UK gilts fell. However, the release of the Autumn budget on November 26, which is expected to see more fiscal consolidation measures, may weigh on MPC members’ views and inflation still hovers significantly above the 2% target.
Saudi Arabia: 600,000 new houses to be completed by 2030. Saudi Arabia’s state-owned National Housing Company announced plans to add 600,000 new homes to the market by 2030, following the expected completion of 300,000 units in 2025. The company highlighted the importance of stronger cooperation with local and global developers to meet this challenge, adding that deals were struck with Chinese developers to construct 100,000 houses in 2026 and that a budget of SR220 billion ($58 billion) was allocated to fund the projects up to 2030. The increased supply is being driven by the Vision 2030 goal of raising the rate of citizen home ownership to a targeted 70% by 2030, having reached 65% as of the end of 2024. In combination with other policy measures, such as the freeze on Riyadh housing rents implemented last month and revisions to the real estate tax law, the increased supply would help quell price pressures in the residential buying and rental markets arising from strong demand and lagging supply, especially in the Riyadh area. These efforts will play a role in helping to sustain the progress towards price stability seen so far this year, with residential home price and rental inflation both on a consistent decline as of the end of Q3.