Epic IPO suggests Saudis feel heat of fading oil 7 Jan 2016 The kingdom may sell a stake in state-owned Aramco, the world’s largest crude producer – by far. The firm’s value could be in the trillions of dollars, dwarfing the likes of Exxon. With oil prices falling and other energy sources on the rise, there’s growing pressure to cash in.
Saudi-Iran standoff magnifies upside risk for oil 4 Jan 2016 The kingdom has cut off diplomatic relations with Iran, suggesting it will continue a strategy of pursuing low oil prices to cripple the weak Iranian economy. An escalation, though, could threaten the one-fifth of world oil supplies that travels through the Strait of Hormuz.
Saudi has chance to teach hedge funds a lesson 3 Dec 2015 The largest OPEC producer has long complained that the biggest risk to a stable oil market is hedge funds who bet on falling prices. A deal to cut production in Vienna on Dec. 4, while a drop in the bucket for Saudi, could push up oil prices and leave speculators with big losses.
Dollar peg remains Saudi Arabia’s best option 27 Nov 2015 Saudi Arabia is under pressure to break its currency peg with the dollar. The inflexible riyal means Saudi can’t devalue to offset weak oil prices. But given Riyadh’s huge forex reserves, the risks of moving to a floating currency still outweigh the rewards.
Oil market rests on Saudi-Iranian output deal 24 Nov 2015 Saudi Arabia says it will work with the world’s biggest oil producers to maintain price stability. To be effective, the OPEC kingpin will also have to make room for Iran to add barrels to the flooded market. The geopolitics are fast moving. But logic points to a deal.
Saudi banks can help to plug oily black hole 2 Nov 2015 A ratings downgrade for Saudi Arabia reflects the impact of falling oil prices, but the kingdom has economic levers it can still pull. Lenders are highly liquid, with room to fund a widening budget deficit. And if push comes to shove, Saudi can even sell bank stakes to outsiders.
Energy subsidies will test Saudi’s pain threshold 29 Oct 2015 The kingdom is considering how to claw back the $107 bln it foregoes each year by subsidising the price of domestic energy. Without that support, companies would be uncompetitive and subjects angry. But the impact of low oil prices makes giveaways an unaffordable luxury.
China offers lessons for Saudi market opening 30 Mar 2015 Despite the differences between the two, the kingdom is copying China’s cautious approach as it grants foreigners direct access to its $523 bln stock market. The experience of the People’s Republic suggests Saudi Arabia’s opening is likely to be a whimper rather than a big bang.
Yemen fighting could lead to lower oil prices 27 Mar 2015 It’s easy to see danger in the Saudi-led bombing of the strategically located country. But it might end in a standoff in which neither Iran nor Saudi Arabia dominate the Middle East. That could lead to an uneasy truce, much higher Iranian production, and cheaper crude.
Saudi succession could cast shadow over oil policy 23 Jan 2015 A clearly identified heir means the death of the Kingdom’s reformist ruler is unlikely to destabilise the world’s largest crude producer. Yet the new king may boost spending to smooth the transition. The change may weaken Saudi Arabia’s tolerance for cheaper oil.
Saudis give free-marketers dose of their medicine 23 Dec 2014 The Kingdom’s message to the United States, Russia and other higher-cost oil producers is simple. If the market sets the price, it will be far too low for comfort. The Saudis and their allies can probably bear the pain long enough for a more disciplined cartel to emerge.
Saudis drop gavel on OPEC confab three weeks early 5 Nov 2014 Brent crude hit $82.55 a barrel, a four-year low, after the kingdom cut the price of U.S.-destined oil ahead of the cartel’s meeting later this month. Cash-strapped Venezuela may bray about cutting supply. But the market reaction underscores how OPEC has become a majority of one.
Saudi supply games expose OPEC impotence 15 Oct 2014 The cartel’s swing producer is watching prices fall. Why? Maybe it’s trying to slow down U.S. shale growth, but that requires crude at well below $90 per barrel. Or it may want to cajole others into sharing painful production cuts. Either way, OPEC is too weak to control markets.
Jumbo $6 bln bank IPO shows Saudi too big to miss 7 Oct 2014 The sale of shares in the kingdom’s top bank will be the largest this year after Alibaba. A few foreign investors may share some of the upside. For most, it’s a reminder of the opportunities on offer when the $584 bln market opens more fully to outsiders next year.
Saudi opening puts Middle East on investor maps 23 Jul 2014 Foreigners may get direct access to the kingdom’s $530 bln stock market from next year. That offers investors a good reason to pay attention to the Middle East beyond oil and war. For an emerging market, Saudi Arabia is well regulated, growing fast, and more stable than most.
Iraq troubles are unlikely to bring new oil crisis 24 Jun 2014 The continued violence looks like a harbinger of a sharp cutback from one of the world’s major oil producers. But the bulk of Iraq’s production is still secure. The Middle East is clearly becoming less stable, but it would take a cascade of problems to create a big price shock.
Fracking may change U.S. foreign policy for good 28 Aug 2013 The abundant supply of hydrocarbons made accessible by hydraulic fracturing has brought America much closer to energy independence and created a buffer for the global oil price. The shift gives Uncle Sam new latitude in handling problems in Syria and throughout the Middle East.
Gulf aid helps Egypt avoid financial collapse 10 Jul 2013 The regime change has bought Cairo new financial backers. A Saudi-UAE pledge of $8 bln gives the country’s interim rulers a chance to implement their controversial transitional roadmap. The hope is that they make better use of bilateral support than their predecessors.
Saudi weekend shift could herald more change 24 Jun 2013 The decision to move the kingdom’s weekend to Friday and Saturday brings the oil producer into line with its neighbours and should boost productivity. It also raises hopes that the Arab world’s largest capital market is edging closer to opening up further to foreign investors.
Alwaleed’s valuation dispute has simple solutions 19 Mar 2013 The Saudi prince’s investment vehicle, Kingdom Holding, has a small free float, poor liquidity and a volatile share price. That has created controversy over its true value. A bigger free float would help investors set its value. Alternatively, delisting would end the controversy.