Saudi pitches to U.S. in diminished circumstances 13 Jun 2016 Cheap oil, the opening up of Iran and shootings in Orlando could all make Deputy Crown Prince Mohammed bin Salman’s visit to the United States unusually tense. Saudi needs security guarantees and oil demand as it tries to modernise its economy. That puts it on the back foot.
Singapore, Saudi put corporate do-gooders on spot 9 Jun 2016 Banks covet business in Saudi Arabia despite its poor human rights. They can say it’s the direction of travel that counts. Singapore, which just told groups like Goldman Sachs to stop backing a gay and lesbian event, is going backwards. It puts corporate sincerity to the test.
Saudi reform plan dodges most taxing question 7 Jun 2016 Income tax is perhaps the missing link in the kingdom’s latest plan to modernise the economy. Saudis currently keep all their earnings. That isn’t compatible with a record budget deficit. Taxing wages is a taboo, but it’s also the best way to diversify away from oil dependence.
OPEC silence beats hollow pledges 2 Jun 2016 Oil producers’ failure to agree on a policy to curb supply is not all bad. A deal would have boosted prices in the short term but been hard to enforce given Saudi-Iran tensions. The already-weak cartel can ill afford the reputational damage of promising more than it can deliver.
OPEC has an oily blind spot over Brexit 2 Jun 2016 Britain leaving the EU would present the cartel with a tricky demand problem. Brexit could slow economic growth in Europe and reduce consumption of crude in the world’s third-largest market for fuel. If that happens OPEC may have to cut output, or risk prices falling again.
Uber receives ultimate disruptor stamp of approval 1 Jun 2016 The taxi-hailing app has snared a $3.5 bln investment from Saudi Arabia’s Public Investment Fund. It’s not just a hedge against the kingdom’s oil dependency. It also confirms Uber as one of the probable central players in the shift to electric, autonomous vehicles.
OPEC’s second coming can only start at the top 31 May 2016 Oil prices could get a boost if bickering members of the cartel can put aside their differences and select a new secretary general. Nigerian Mohammed Barkindo looks like the candidate most capable of getting OPEC functioning, and restoring its image among non-members like Russia.
Qatar’s debt bonanza stores up problems for future 27 May 2016 Too much of a good thing could be bad for the Gulf state. It has just raised a whopping $9 billion in the bond market thanks to investors’ hunger for yield. Loading up on debt will help Qatar cope with lower energy prices, but just dodges its biggest problem: lavish spending.
Oil sustainably above $50 requires OPEC action 26 May 2016 Prices sneaked above a psychologically important marker. But given temporary geopolitical and climate drivers explain why, oil bulls can’t declare victory yet. Only a major reduction in global oversupply - the preserve of OPEC - can send oil markets much higher.
Saudi’s three great pillars are showing cracks 24 May 2016 Oil, Islam and the ruling family of Al Saud bind the kingdom together. But low commodity prices and disruptive economic reforms risk opening up divisions within the ruling class. That in turn could unpick the all-important 80-year pact between religious leaders and the state.
Saudi downgrade ought to galvanise reform 16 May 2016 A cut to its credit rating by Moody’s confirms the kingdom has taken the hard path: reform and low oil prices, with a goal of being diversified away from crude by 2030. A stronger balance sheet requires pricier oil or more reform impetus. The latter is the only real option.
Saudi reshuffle points to era of oil volatility 9 May 2016 Ali al-Naimi, just fired as oil minister, was the architect of a bitter price war but also had successes reaching consensus with OPEC. His successor Khalid al-Falih may lack the same influence. It suggests a more centralised Saudi establishment, but more discord in oil markets.
Saudi reforms could be low oil price’s cure 26 Apr 2016 Cheap oil helped Saudi Arabia’s deputy crown prince get backing for a plan to end his country’s addiction to crude. With that strategy to diversify the economy now rubber-stamped, higher prices are no longer a barrier to reform. Saudi could, maybe, have the best of both worlds.
Saudi Arabia’s post-oil reform vision looks blurry 25 Apr 2016 Riyadh’s new plan to reform the economy, Vision 2030, entails creating a giant SWF and listing a stake in state oil firm Aramco. It will raise cash, but won’t solve the kingdom’s crude problem. To truly advance as an economy, Saudi needs greater economic and social openness.
Luxury groups should focus their FOMO on Iran 25 Apr 2016 With $32.6 bln of frozen offshore cash to be repatriated post-sanctions and GDP to grow 6 pct next year, Tehran can be a magnet for high-end consumption. A lack of infrastructure and political volatility are reasons to hesitate. Offsetting that is the risk of missing out.
Chancellor: Oil prices don’t need a Doha to rise 22 Apr 2016 An agreement among feuding OPEC members to cut production may still be elusive. But the Saudis and other oil-producing nations are in no position to ramp up. As U.S. oil output is set to fall sharply this year, the price of energy is likely to keep heading upwards.
Saudi’s sweet debt deal could rebound on banks 21 Apr 2016 The kingdom is close to its first international debt deal in 25 years to plug a hole in its finances caused by weak oil prices. Vast oil reserves make Saudi debt enticing, but the price slump is changing the game in several ways. And Middle East states have defaulted before.
Saudi U.S. selloff threat not to be trifled with 20 Apr 2016 The kingdom has told lawmakers it would dump some $750 bln of assets should Congress pass a bill allowing 9/11 victims to sue. These funds are its last line of defense to lower oil prices. That the alternative - having assets frozen - is an even worse outcome is scarier still.
Give OPEC more power and let Iran and Saudi bicker 19 Apr 2016 A bitter struggle between Riyadh and Tehran has hit the credibility of the group, after their rift stymied a freeze to oil output. The dispute implies the cartel needs reform and more power to offset the political motives of its members. The outcome: a more stable oil market.
OPEC freeze failure could hasten oil’s recovery 18 Apr 2016 Producers failed to agree a deal to freeze supply at a meeting in Doha. The failure was largely due to Saudi Arabia’s refusal to allow Iran to be exempted from an agreement. Prices will drop initially, but if OPEC disintegrates the stalemate could hasten crude’s recovery.