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Tuesday, 27 June 2017

Saudi Arabia And Oil Prices: Careful Steering Needed - Bloomberg

Saudi Arabia And Oil Prices: Careful Steering Needed - Bloomberg:

"Until the Panama Canal was expanded last year, tankers traversing its old 109-foot-wide locks might have only a couple of feet to spare on either side.



Their ticklish task of squeezing through the gap without mishap offers a useful metaphor for Saudi Arabia's big problem in trying to manage oil prices -- except, in Saudi Arabia's case, it's more like steering a tanker through the canal wearing a blindfold, and with a mutinous crew.



The canal, in this case, is a range of oil prices; specifically, the range above which U.S. shale frackers let loose and below which they go into hibernation."



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Qatar riyal firms against dollar in forward market | Reuters

Qatar riyal firms against dollar in forward market | Reuters:

"The Qatari riyal strengthened against the dollar on Tuesday in the forward market, following two days of sharp falls caused by the continued standoff between Doha and neighbouring Arab powers. One-month riyal forwards showed the currency marked as firm as 3.751 per dollar, according to Reuters data, after hitting a low of 3.793 on Monday. Three-month forwards also saw the riyal firming up to 3.755 compared to the previous day's low of 3.796. Qatari assets had come under pressure since Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed a boycott on Qatar three weeks ago. The four Arab powers accuse Doha of backing militants and issued an ultimatum over the weekend, including demands that Qatar shut down a Turkish military base. "



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Oil's in a Bear Market, and Stocks Will Soon Follow - Bloomberg

Oil's in a Bear Market, and Stocks Will Soon Follow - Bloomberg:

"Saudi Arabia's King Salman recently named his son, Mohammed bin Salman, as his successor. The 31-year-old crown prince plans to modernize the kingdom with his "Vision 2030" economic overhaul aimed at weaning Saudi Arabia off oil via increased private sector activity and foreign investment. His icon-breaking plan is obviously a reaction to the collapse in crude oil prices. It’s badly needed. Almost 80 percent of government revenue comes from oil money. Saudis enjoy a comfortable lifestyle, supported by oil revenues. Two-thirds work for government-related entities, with many in no-show jobs. The youth population is mushrooming, with 45 percent of the total under the age of 25, and the unemployment rate for those between 15 and 24 is 31 percent. GDP has been declining since 2014. Weak crude oil prices also threaten the crown prince’s plan to raise $2 trillion through Saudi Aramco’s IPO. The Saudis assume $60 per barrel for Brent crude in their Aramco calculations versus about $45 today. And the proxy wars with arch-rival Iran in Yemen and Syria are very expensive and never-ending, so with weak oil prices, the kingdom has been forced to borrow heavily from overseas. "



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