Oil exporters face fall in foreign exchange reserves:
"The foreign exchange reserves of big oil exporting nations have fallen to their lowest level for a decade as weak energy prices force many countries to raid their stockpiles. The decline in reserves highlights the waning clout of some of the world’s leading petro states and how little time they have to diversify their economies before their cash cushions disappear. At the end of 2016, 13 big energy exporters had combined reserves of $967bn, according to data from the International Monetary Fund, well below the peak of $1.26tn at the end of 2013 and the lowest figure since 2006."
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Monday, 26 June 2017
A family coup in Saudi Arabia
A family coup in Saudi Arabia:
"A week ago I heard a faint rumour of an intense quarrel within the Saudi royal family, which was presumed to be focused on an attempt to force King Salman to rein in his son, the 31-year-old deputy crown prince, Mohammed bin Salman, and to return the country to something closer to normality after three years of chaotic ambition and growing instability. I started to draft a piece discussing how such a coup could reshape the oil market and what action Saudi, under new leadership could take to halt the continuing fall in oil prices. Now it seems the rumour was correct but the presumption was mistaken. The winner of the coup was not as expected the crown prince Mohammed bin Nayaf but MbS himself, who has deposed the crown prince and taken full authority over everything including the key role of internal security. Prince Nayef, one of the most experienced and respected of the Saudi leaders, has been shown in a humiliating picture kneeling in supplication. There is something Shakespearean about what is happening. Who better to chronicle the unravelling story of the House of Saud? An ailing king breaks the delicate balance of the ruling family to promote his son — a young man whose vanity can be exploited by every breed of consultant and banker — over the trusted heir apparent. All this against the background of falling revenues from the kingdom’s one source of wealth, hostility from neighbours and sometime friends, in the context of a region split by the revival of religious conflicts. We are somewhere between King Lear and Richard II."
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"A week ago I heard a faint rumour of an intense quarrel within the Saudi royal family, which was presumed to be focused on an attempt to force King Salman to rein in his son, the 31-year-old deputy crown prince, Mohammed bin Salman, and to return the country to something closer to normality after three years of chaotic ambition and growing instability. I started to draft a piece discussing how such a coup could reshape the oil market and what action Saudi, under new leadership could take to halt the continuing fall in oil prices. Now it seems the rumour was correct but the presumption was mistaken. The winner of the coup was not as expected the crown prince Mohammed bin Nayaf but MbS himself, who has deposed the crown prince and taken full authority over everything including the key role of internal security. Prince Nayef, one of the most experienced and respected of the Saudi leaders, has been shown in a humiliating picture kneeling in supplication. There is something Shakespearean about what is happening. Who better to chronicle the unravelling story of the House of Saud? An ailing king breaks the delicate balance of the ruling family to promote his son — a young man whose vanity can be exploited by every breed of consultant and banker — over the trusted heir apparent. All this against the background of falling revenues from the kingdom’s one source of wealth, hostility from neighbours and sometime friends, in the context of a region split by the revival of religious conflicts. We are somewhere between King Lear and Richard II."
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Qatar Airways’ courtship of American is one for the long haul
Qatar Airways’ courtship of American is one for the long haul:
"Doug Parker may have been left puzzled, concerned and “not happy” after Qatar Airways revealed its plan to buy up to a 10 per cent stake in American Airlines last week. But the US carrier’s chief executive should have also added flattered to his list of emotions. Akbar Al Baker, the outspoken chief executive of the Gulf’s fastest-growing supercarrier, has repeatedly stressed that his strategy is to invest in profitable airlines — “goldsmiths”, as he calls them, rather than “scrap dealers”. The dig at rival Middle Eastern airline Etihad Airways is clear. The Abu Dhabi carrier’s strategy of taking minority stakes in troubled airlines to drive growth has come at a cost. Alitalia, the Italian carrier, is in administration. Air Berlin is on life support. Etihad is in the midst of reassessing its strategy."
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"Doug Parker may have been left puzzled, concerned and “not happy” after Qatar Airways revealed its plan to buy up to a 10 per cent stake in American Airlines last week. But the US carrier’s chief executive should have also added flattered to his list of emotions. Akbar Al Baker, the outspoken chief executive of the Gulf’s fastest-growing supercarrier, has repeatedly stressed that his strategy is to invest in profitable airlines — “goldsmiths”, as he calls them, rather than “scrap dealers”. The dig at rival Middle Eastern airline Etihad Airways is clear. The Abu Dhabi carrier’s strategy of taking minority stakes in troubled airlines to drive growth has come at a cost. Alitalia, the Italian carrier, is in administration. Air Berlin is on life support. Etihad is in the midst of reassessing its strategy."
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Qatar CDS hit 1-year high after ultimatum issued | Reuters
Qatar CDS hit 1-year high after ultimatum issued | Reuters:
"The cost of insuring exposure to Qatari sovereign debt rose to a one-year high on Monday after neighbouring Arab states, which have imposed sanctions on Qatar, issued an ultimatum, giving Doha 10 days to comply. Five-year credit default swaps (CDS) for Qatar rose 4 basis points (bps) from Friday's close to 115 bps, according to IHS Markit data, the highest level since last June. Saudi Arabia, Egypt, the United Arab Emirates and Bahrain are amongst those who have severed ties with Doha, accusing it of supporting terrorism. "
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"The cost of insuring exposure to Qatari sovereign debt rose to a one-year high on Monday after neighbouring Arab states, which have imposed sanctions on Qatar, issued an ultimatum, giving Doha 10 days to comply. Five-year credit default swaps (CDS) for Qatar rose 4 basis points (bps) from Friday's close to 115 bps, according to IHS Markit data, the highest level since last June. Saudi Arabia, Egypt, the United Arab Emirates and Bahrain are amongst those who have severed ties with Doha, accusing it of supporting terrorism. "
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Islamic banks in the GCC face a tough year ahead | GulfNews.com
Islamic banks in the GCC face a tough year ahead | GulfNews.com:
"Islamic banks in the GCC are expected to face a tough year ahead as the slowdown in asset growth is likely to persist this year, according to global rating agency Standard & Poor’s. Islamic banks’ asset growth declined to 5.3 per cent in 2016 from 10.7 per cent in 2014. “In our base-case scenario, we assume that asset growth will stabilise at about 5 per cent as governments’ spending cuts and revenue-boosting initiatives, such as new taxes, reduce Islamic banks’ growth opportunities in the corporate and retail sectors. We see banks becoming more cautious and selective in their lending activities, triggering stiffer competition,” said Dr Mohammad Damak, Head of Islamic Finance, S&P Global Ratings. The impact of the slowdown will vary across markets. Although the economic slowdown will likely remain pronounced in Saudi Arabia, Islamic banks’ growth accelerated there in 2016, thanks to their strategy of increasing business among corporates and small and midsize enterprises (SMEs)."
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"Islamic banks in the GCC are expected to face a tough year ahead as the slowdown in asset growth is likely to persist this year, according to global rating agency Standard & Poor’s. Islamic banks’ asset growth declined to 5.3 per cent in 2016 from 10.7 per cent in 2014. “In our base-case scenario, we assume that asset growth will stabilise at about 5 per cent as governments’ spending cuts and revenue-boosting initiatives, such as new taxes, reduce Islamic banks’ growth opportunities in the corporate and retail sectors. We see banks becoming more cautious and selective in their lending activities, triggering stiffer competition,” said Dr Mohammad Damak, Head of Islamic Finance, S&P Global Ratings. The impact of the slowdown will vary across markets. Although the economic slowdown will likely remain pronounced in Saudi Arabia, Islamic banks’ growth accelerated there in 2016, thanks to their strategy of increasing business among corporates and small and midsize enterprises (SMEs)."
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Oil joke Mexico set for last laugh after exploration bids | The National
Oil joke Mexico set for last laugh after exploration bids | The National:
"An Italian, a Colombian and a Russian walked into Mexico last week – part of the transformation of a country that had long been something of an oil industry joke. Mexico’s latest bid round for shallow-water oil exploration was highly successful – promising more production, and demonstrating the virtues of openness to international investment. The Italian national champion, Eni, won a block in 2015’s "Round One", and has already enjoyed success, finding light oil in March in the shallow waters of the Bay of Campeche, in the south-east. This was the first private discovery in the country for 75 years."
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"An Italian, a Colombian and a Russian walked into Mexico last week – part of the transformation of a country that had long been something of an oil industry joke. Mexico’s latest bid round for shallow-water oil exploration was highly successful – promising more production, and demonstrating the virtues of openness to international investment. The Italian national champion, Eni, won a block in 2015’s "Round One", and has already enjoyed success, finding light oil in March in the shallow waters of the Bay of Campeche, in the south-east. This was the first private discovery in the country for 75 years."
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