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Oil hit an 11-month high just below $57 a barrel on Tuesday, bolstered by Saudi Arabia’s plans to limit supply, offsetting worries that rising coronavirus cases globally would curtail fuel demand.
Brent crude settled up 92 cents, or 1.7%, at $56.58 a barrel by after touching its highest level since last February at $56.75. U.S. West Texas Intermediate (WTI) gained 96 cents, or 1.8%, to $53.28.
Saudi Arabia plans to cut output by an extra 1 million barrels per day (bpd) in February and March to keep inventories in check.
The Saudi cut is part of an OPEC-led deal in which most producers will hold output steady in February. Last year’s record cuts from OPEC and its allies helped oil recover from historic lows reached in April.
Qatar National Bank QPSC said its assets have passed the 1 trillion-riyal ($273.5 billion) mark and it set aside more money in provisions as a “precautionary measure.”
The Middle East’s biggest bank booked 5.8 billion riyals in loan-loss provisions, compared with 3.18 billion riyals a year ago, according to a statement on Tuesday. Total assets ended 2020 at 1.025 trillion riyals, an increase of about 9% from the previous year.
Profitability for lenders in the Gulf remains under pressure from the coronavirus pandemic as disruptions to trade and travel continue to rattle the energy-rich region. The outlook for Qatar is turning more favorable following the restoration of its ties with Saudi Arabia, the United Arab Emirates, Bahrain and Egypt after a diplomatic breakthrough this month ended a three-year dispute.
Oman’s Sultan Haitham will be succeeded by his eldest son Dhi Yazan, according to a new basic law published on Tuesday that creates a new position of crown prince and establishes succession from ruler to the eldest son.
FILE PHOTO: Sultan Haitham bin Tariq al-Said gives a speech after being sworn in before the royal family council in Muscat, Oman January 11, 2020. REUTERS/Sultan Al Hasani/File Photo
Sultan Haitham bin Tariq al-Said had announced plans for the constitutional change on Monday, a year after the death of his predecessor, Sultan Qaboos. The new basic law was published on Tuesday in the official gazette.
Sultan Qaboos fathered no children and designated no successor publicly during his 49-year reign.
Haitham’s move to designate a crown prince could strengthen the predictability of Omani politics, following the final years of Sultan Qaboos’ rule when secrecy about the succession raised concerns for stability.
Saudi Arabia has put on hold financing plans potentially worth billions of dollars for the expansion of Riyadh’s airport, sources said, a sign that the kingdom is re-assessing strategic priorities after the coronavirus crisis.
Riyadh Airports Company, which manages and operates King Khalid International Airport in the Saudi capital, approached banks last year with a request for financing proposals on the planned airport expansion, which sources said would have been worth several billions of dollars.
The expansion was part of the country’s aim to diversify the economy, create jobs and reduce dependence on oil revenues.
The company has now halted the process, three banking sources said.
Kuwaiti ministers handed in their resignations to the prime minister on Tuesday, the government communications office (CGC) said, days after lawmakers submitted a motion asking to question the premier over issues including the makeup of the cabinet.
Prime Minister Sheikh Sabah al-Khalid al-Sabah must submit the resignations to the OPEC member state’s ruler, Emir Sheikh Nawaf al-Ahmed al-Sabah, for approval. Three main Kuwaiti newspapers earlier said Sheikh Sabah was expected to do so.
The resignation of the cabinet, formed on Dec. 14, had been expected after the move in parliament earlier this month that posed the first political challenge for the new emir as the country faces its worst economic crisis in decades.
The prime minister had been due to be questioned at a parliamentary session on Jan. 19.
Stock markets in the United Arab Emirates extended their winning run on Tuesday with financials lifting the Abu Dhabi benchmark to its fourth straight session of gains.
The Abu Dhabi index .ADI finished 0.4% higher as the UAE's largest lender, First Abu Dhabi Bank FAB.AD, firmed 0.9%, while Abu Dhabi Islamic Bank ADIB.AD added 1%.
In Dubai, the main share index .DFMGI tacked on nearly a percent, supported by a 1.2% gain in sharia-compliant lender Dubai Islamic Bank DISB.DU and a 0.9% rise in Emirates NBD Bank ENBD.DU, the emirate's biggest bank.
The Abu Dhabi and Dubai benchmarks have now ended seven sessions in positive territory out of the eight trading days so far in the New Year.
Underpinning the broader regional gains on the day, oil hit an 11-month high towards $57 a barrel as tighter supply and expectations of a drop in U.S. petroleum inventories offset concerns over climbing coronavirus cases globally. O/R
Saudi Arabia plans to cut output by an extra 1 million barrels per day (bpd) in February and March to stop inventories from building up. The latest U.S. supply reports are expected to show crude stocks fell for a fifth straight week. EIA/S
Saudi Arabia's benchmark index .TASI added 0.2%. Healthcare firm Dr. Sulaiman Al-Habib Medical Services Group Co 4013.SE was the best performer in the index, gaining 1.4%.
Air conditioner maker Al-Omran Industrial and Trading Co 4141.SE gained nearly 10%, while financial firm Allied Cooperative Insurance Group 8150.SE put on 8.8%
Elsewhere, in Qatar, the index .QSI ended the day's trading little changed.
Telecoms firm Ooredoo ORDS.QA and consumer staples company Baladna Co BLDN.QA put on 2.5% and 2.2%, respectively, while real estate stock Ezdan Holdings ERES.QA declined 3.5%.
Qatar National Bank, the Gulf’s biggest bank by assets, on Tuesday reported a drop in annual profit of more than 16%, hit by $1.6 billion in impairments during a year when the region’s economy was affected by the coronavirus outbreak.
Gulf banks have faced a slowdown in business and a rise in loan impairments as Covid-19 hit the region. The outlook for 2021 is uncertain due to the protracted nature of the economic recovery.
QNB reported a net profit of 12 billion riyals ($3.20 billion)in 2020, it said in a statement, down from 14.4 billion riyals in 2019.
The profit was slightly above the mean forecast of 11.7 billion riyals by seven analysts, based on Refinitiv data.
Occupancy at Dubai’s hotels surged in December and neared pre-pandemic levels as travelers flocked to the emirate to escape coronavirus lockdowns at home.
Hotels were 71% full last month -- the highest figure since February -- research firm STR said, citing preliminary data. Dubai’s hotel occupancy, for years one of the highest in the world, slumped to 23% in part of 2020 from about 80%.
Dubai attracts about 16 million tourists annually and its hotels were initially among the worst-hit by travel restrictions introduced to keep the pandemic in check.
Later in 2020, the government established a travel corridor with the U.K., which brought scores of holidaymakers to the Persian Gulf city. Tourism, key to Dubai’s economy, peaks during the northern hemisphere’s winter, with travelers enticed by Dubai’s beaches and sunny weather.
With Israel on track to have all of its adult population vaccinated against coronavirus by the end of March, a Barclays Plc analyst expects banking shares to lead a broad re-rating within the country’s stock market.
“We see Israeli banks best positioned to rerate”, Tavy Rosner wrote in a note on Tuesday, adding that their excess capital has made them resilient during the pandemic, though their loan growth has been offset by record provisions. This curb may soon disappear.
If the vaccination target is met, “we are likely to see the banks post significant loan loss provision recovery in the second half of 2021,” he said.
Rosner expects the economy to fully reopen over the coming months, highlighting a central bank forecast of 6.3% gross domestic product growth in 2021 under the rapid vaccination scenario. The nation has so far vaccinated 21% of its population, while sizable parts of its economy are shut down in the latest of three lockdowns.
Citigroup Inc.’s wealth-management business in the United Arab Emirates plans to triple assets under management to $15 billion over the next five years by increasing the number of its client-relationship managers.
As part of the strategy, Citibank UAE is targeting to quadruple the number of affluent clients in the country, the company said in an emailed statement. The growth will partly come from a mix of physical and digital investments and providing more access to its institutional products and content to retail customers.
New York-based Citigroup is deepening its foothold in the Middle East as some rivals like Credit Suisse Group AG and Standard Chartered Plc scale back their wealth-management and private-banking businesses as part of global reorganizations and staff reductions. Others, including UBS Group AG, have been making a bigger push into a region flush with oil-wealth.
Per-capita gross domestic product in the UAE was about $43,100 in 2019, three times that of the world average and higher than countries including the U.K., France, New Zealand and Japan, according to World Bank data.
Hedge fund managers are starting to diverge over the likelihood of further oil price increases as Brent futures surge above $50 per barrel and global coronavirus infections accelerate.
Hedge funds and other money managers purchased the equivalent of 14 million barrels of futures and options in the six most important contracts in the week ending Jan. 5.
Last week’s buying takes total purchases to almost 400 million barrels in the nine weeks since the first successful coronavirus vaccine trials were announced in early November.
But the rate of buying has slowed as prices have climbed and the balance of short-term price risks has progressively shifted from the upside through neutral to the downside.
In the most recent week, fund managers added 43 million barrels of bullish long positions, but also 30 million barrels of bearish short ones, the largest increase for two months.
Nomura Holdings Inc. is closing its offices in Qatar and Bahrain as part of a push to move some of its regional and client coverage to bigger financial centers, according to people familiar with the matter.
Japan’s biggest brokerage, which also exited Saudi Arabia last month, has been shrinking its investment banking presence in the Middle East. Nomura will continue to serve clients in Saudi Arabia, Bahrain and Qatar from Dubai or locations like London, where it has a larger presence, said the people, who asked not to be identified because the information is private.
Nomura began overhauling its global wholesale business more than a year ago in a bid to save $1 billion in costs and sustain profitability abroad. Chief Executive Officer Kentaro Okuda has persisted with those efforts by cutting dozens of investment banking jobs in the U.S., Bloomberg reported in July. Nomura also eliminated some investment banking positions in Dubai last year.
The restoration of ties between Qatar and Saudi Arabia, the United Arab Emirates, Bahrain and Egypt after a three-year dispute may be a factor for financial firms looking to reshape their presence in the region. Gulf states are opening their airspace to Qatar and resuming trade with the gas-rich state after this month’s diplomatic breakthrough.
Equity and equity-related issuance in the Middle East and North Africa (MENA), which totalled $4.6 billion in 2020, is down 86 percent from 2019, a four-year low in equity capital market (ECM) proceeds, according to global data provider Refinitiv.
With the increase, the company’s shares went up from more than 448.729 million to 898.729 million. The offering price was set at 10 Saudi riyals a share.
According to the company, the increase was proposed to capitalise “part of the amounts due to Zain Kuwait”, which owns 37 percent of Zain KSA, and to pay “part of the Murabaha facility”.
Oil rose above $56 a barrel on Tuesday and stayed close to an 11-month high, as tighter supply and expectations of a drop in U.S. inventories offset concerns over climbing coronavirus cases globally.
Saudi Arabia has said it will cut output by an extra 1 million barrels per day (bpd) in February and March to stop inventories from building up. The latest U.S. oil supply reports are expected to show crude stocks fell for a fifth straight week. [EIA/S]
Brent crude had climbed 58 cents, or 1%, to $56.24 a barrel by 0920 GMT, while U.S. West Texas Intermediate (WTI) gained 42 cents, or 0.8%, to $52.67.
“I think the market will be rapid to conclude that yesterday’s modest pullback in price, provided the virus spread in China remains contained, was but a blip on the radar screen,” Stephen Innes, chief global market strategist at Axi, said in a report.
Major stock markets in the Gulf were mixed in early trade on Tuesday, with financial shares lifting the Dubai index.
Saudi Arabia's benchmark index .TASI fell 0.1%, with oil behemoth Saudi Aramco 2222.SE dropping 0.4%, while the country's largest lender National Commercial Bank 1180.SE was down 0.6%.
Meanwhile, Credit Suisse CSGN.S said on Monday it had opened a branch in Riyadh to offer wealthy Saudi Arabian clients a greater range of financial services, after obtaining a local banking licence in 2019.
Western financial institutions have been seeking opportunities in Saudi Arabia since the government unveiled plans to privatise state assets and introduced reforms to attract foreign capital under its Vision 2030 programme to reduce the economy's dependence on oil.
Dubai's main share index .DFMGI gained 0.2%, supported by a 1% increase in sharia-compliant lender Dubai Islamic Bank DISB.DU and a 0.2% rise in Emirates NBD Bank ENBD.DU.
The non-oil sector in the Middle East's tourism and business hub Dubai returned to growth in December, although the expansion was modest as employment fell and sentiment for the new year was subdued, the seasonally adjusted IHS Markit Dubai Purchasing Managers' Index survey showed.
Dubai has been hit hard by the coronavirus crisis and its economy is expected to have contracted by 6.2% in 2020.
In Abu Dhabi, the index .ADI edged up 0.1%, with the United Arab Emirates' largest lender First Abu Dhabi Bank FAB.AD rising 0.3%.
The Qatari index .QSI slipped 0.2%, hit by a 1.5% fall in Commercial Bank COMB.QA and a 0.5% decrease in Industries Qatar IQCD.
According to the company, the increase was proposed to capitalise “part of the amounts due to Zain Kuwait”, which owns 37 percent of Zain KSA, and to pay “part of the Murabaha facility”.