Qatar standoff spells end of Gulf cooperation 3 Jul 2017 Saudi Arabia has granted the sheikhdom two more days to comply with its demands. Failure to reach a deal could escalate the dispute, hitting regional economies and investors in equal measure. But even if both sides back down, plans for greater economic collaboration are on hold.
Oil markets too calm over Qatar ultimatum 23 Jun 2017 Doha’s Gulf neighbours have imposed a 10-day deadline to comply with demands including reparations, closing Al Jazeera and regular inspections. Markets have assumed the standoff won’t turn violent and impact oil supply from the region. That assumption is looking less secure.
Saudi Aramco IPO is exercise in reverse valuation 22 Jun 2017 The oil producer is worth $2 trillion, say its owners. The question might not be whether that valuation is right, but what Aramco’s owners and bankers will have to do to get it. A Breakingviews calculator suggests this will be a stretch of reason.
As Saudi’s new crown prince rises, so could oil 21 Jun 2017 Mohammed bin Salman has replaced his cousin as heir. That gives him a firmer hand to push through economic reform, but maybe less incentive to do so. Where he is likely to make a bigger mark is in squabbles with Gulf neighbours and taking firmer action over a low oil price.
Qatar’s weak link in Saudi stand-off: people 9 Jun 2017 The sheikhdom has the money and resources required to withstand a cold war with its neighbours. Its economy depends on foreign expatriates, though, who account for more than three-quarters of the population. Preventing a demographic drain is the best reason to agree to a truce.
Crude price drop is symptom of rising U.S. clout 7 Jun 2017 U.S. oil fell 5 pct to under $46 a barrel after the nation's stocks unexpectedly increased. Back in the day, an attack in Iran and tension between OPEC members Saudi Arabia and Qatar might have dominated. Demand was soft, too, but America's shale is changing the balance of power.
Qatar crisis points to quick but uncomfortable fix 6 Jun 2017 As Arab states and U.S. President Trump align against the emirate, the chance of leadership change is rising. Another reshuffle within the ruling family might unblock trade and diplomatic links without affecting Qatar’s economic prospects. But the precedent would be alarming.
Qatar quarrel shows limit of its sovereign wealth 6 Jun 2017 The emirate’s $300 bln-plus fund has snapped up landmark buildings and stakes in companies like Barclays and Rosneft. The spree was meant to generate returns and diplomatic clout. But Qatar’s largesse has produced few allies to help it face down its more powerful neighbours.
Saudi-Qatar rift is old theme with Trumpian twist 5 Jun 2017 After the U.S. president’s whistlestop visit, the kingdom has turned on its gas-rich neighbour. Saudi has long suspected Qatar of supporting terrorism and sidling up to Iran. Deep fractures in a region that pumps a fifth of the world’s oil could spill over into markets.
Politics align for Malaysia bank merger 1 Jun 2017 Efforts to squish together the country's banks have repeatedly failed. Now RHB could buy AmBank, creating a $9 bln group. After the 1MDB fund scandal, big shareholders may be keener to do a deal. A rising oil price helps too. The trick will be to keep the structure simple.
Trump uses carrot and stick with wrong countries 30 May 2017 The U.S. president berated NATO for not spending more on defense, putting the tally at $119 bln. In Saudi Arabia, he praised leaders and facilitated a $110 bln arms sale. Trump needs more from Europe while Riyadh is dependent on D.C. He may be better served reversing tactics.
Saudi dollars overexcite Blackstone’s investors 23 May 2017 They've pushed the private-equity firm's shares up 9 pct since the kingdom's possible $20 bln infrastructure commitment was revealed, bringing the market cap to $38 bln. But finding investments will take time, and fees will be on the low side. The value uplift looks overdone.
Only Russia can make OPEC great again 23 May 2017 Moscow is giving the cartel more pricing clout. A mooted deal to extend output cuts and drain global crude stockpiles can only succeed with the continued support of the world’s biggest crude producer. With U.S. drillers recovering, it may be time to make the alliance permanent.
Clarity missing from SoftBank’s $100 bln Vision 22 May 2017 Japanese maverick Masayoshi Son has closed the first round of his huge tech fund. If he can find more gems like Alibaba, this could be a bonanza for SoftBank investors. For now, he has kept them in the dark without crucial details on everything from fees to profit sharing.
Saudis place $20 bln bet against U.S. dysfunction 21 May 2017 The Kingdom's pledge to Blackstone may turn into $100 bln of firepower aimed at upgrading American infrastructure. The problem is finding states and cities that want private cash. Riyadh will need a lot more patience than with its equally huge SoftBank-led tech venture.
OPEC caught in vicious Permian cycle 19 May 2017 As President Trump heads to Saudi Arabia, the oil cartel looks set to extend production cuts. It may buoy prices and keep drills running. But efficient U.S. wells in the Permian and elsewhere will benefit most, limiting increases. It’ll be hard for OPEC to regain the upper hand.
Trump visit exposes Saudi Arabia’s insecurity 18 May 2017 The U.S. president is heading to Riyadh to rejuvenate an ailing alliance. Trade has suffered and America’s shale oil boom has undermined the kingdom’s status as a key energy supplier and security priority. Rather than build confidence, Trump’s trip could open old wounds.
OPEC’s oil price conundrum requires new bargain 9 May 2017 The cartel’s decision to restrict output has failed to revive prices. Extending the current deal – as Saudi Arabia’s oil minister has hinted – is not guaranteed to drain stockpiles. Making deeper cuts at the expense of market share would do the trick, but could be hard to agree.
London could trip on Aramco’s IPO red carpet 4 May 2017 The city’s stock exchange is considering a new kind of governance-lite listing to attract the Saudi oil producer. Innovation is okay, if new rules are clear and existing ones aren’t watered down. Too naked a desire to please the powerful, though, would hurt London’s reputation.
Saudi austerity U-turn highlights reform hurdles 24 Apr 2017 The kingdom has restored perks for public sector workers in an attempt to preserve its broader economic agenda. Though the unpopular measures helped cut the deficit the social costs outweighed the benefits. Riyadh is learning that austerity and reform rarely work in tandem.