Oil drops sharply after OPEC cancels meeting | Reuters

Oil drops sharply after OPEC cancels meeting | Reuters

Oil prices tumbled on Tuesday in a volatile session after OPEC producers canceled a meeting when major players were unable to come to an agreement to increase supply.

Brent crude settled down $2.63 a barrel, or 3.4%, to $74.53, after hitting a session peak of $77.84, its highest since October 2018.

U.S. West Texas Intermediate (WTI) crude futures settled down $1.79, or 2.4%, to $73.37 after touching $76.98, highest since November 2014.

On Monday, ministers from OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, abandoned talks after negotiations failed to close divisions between Saudi Arabia, the largest OPEC producer, and United Arab Emirates.

Initially, oil rallied on news of the breakdown in talks, but prices retreated as traders focused on the possibility that the strife will cause some national producers to open the taps and start exporting more barrels.

The Minuses of OPEC+ Are Exposed by the #UAE - Bloomberg

The Minuses of OPEC+ Are Exposed by the UAE - Bloomberg

The genius of the OPEC+ brand is that it literally spins a negative as a positive. OPEC’s expansion in late 2016 wasn’t a case of groupies clamoring to gain entry to the club; rather, an old institution fallen on hard times sought fresh supporters. Since then, it has worked best the way the old OPEC worked best: with its back to the wall. When Covid-19 hit last year, OPEC+ called ceasefire on a barely-begun price war and slashed production.

A year or so on, oil is back up to almost $80 a barrel, but the club is unhappy again. And it’s for the same underlying reason. You could call that reason the energy transition but it’s more of an everything transition.

The spat between the United Arab Emirates and Saudi Arabia (and the rest of OPEC+, nominally) is on one level about barrels and baselines. The UAE contends it deserves a higher production target and also doesn’t want to extend the agreement. Saudi Arabia, meanwhile, has no desire to reopen the books on quotas and wants to keep a firm grip on the oil market through 2022.

But the schism runs a bit deeper than that. The UAE has been acting a lot like it foresees an expiration date for OPEC, plus-size or otherwise. It has invested heavily in boosting production capacity (hence the insistence on a higher target). It has sliced and diced its oil business into saleable chunks, keeping control but bringing in cash upfront. It has launched a new oil futures benchmark that, if to be successful, rather undercuts the whole idea of supply restrictions.

In short, the UAE is preparing for a world in which oil demand could peak and low-cost producers such as itself are best served selling every barrel as quickly as they can.

Biden Team Spoke to #Saudi, #UAE About OPEC Talks and Oil Prices - Bloomberg

Biden Team Spoke to Saudis, UAE About OPEC Talks and Oil Prices - Bloomberg

Biden administration officials are “encouraged” by ongoing OPEC talks and have spoken with officials in Saudi Arabia and the United Arab Emirates in hopes of reaching an agreement to stem the rise in crude prices, White House Press Secretary Jen Psaki said.

“We’re not a party to these talks but over the weekend and into this week, we’ve had a number of high-level conversations with officials in Saudi Arabia, the UAE and other relevant partners,” Psaki said Tuesday during a briefing at the White House. She declined to specify which U.S. officials were involved but signaled that she didn’t expect President Joe Biden to personally make calls.

The U.S. hopes talks will lead to an agreement that “will promote access to affordable and reliable energy,” she said. The impact of talks on gas prices in the U.S. is of interest to the administration, she said.

“The president wants Americans to have access to affordable and reliable energy, including at the pump. And so that’s why our team is constantly monitoring gas prices and directly communicating with OPEC parties to get to a deal and allow proposed production increases to move forward,” she said.

Crude prices have soared and fluctuated as Saudi Arabia and the UAE spar over a production increase. A stall in talks raises the prospect that either nation could dump their quotas and raise supply. Existing OPEC+ production limits remain in place.

Top 10: #Saudi NCB Capital leads in Middle East asset management with over $50bln AUM | ZAWYA MENA Edition

Top 10: Saudi NCB Capital leads in Middle East asset management with over $50bln AUM | ZAWYA MENA Edition

NCB Capital, the investment banking arm of the Saudi Arabia-based National Commercial Bank, is the Middle East’s biggest asset manager with $50.4 billion in assets under management (AUM), according to Forbes Middle East.

Bahrain’s Investcorp follows with $35 billion in AUM. Saudi’s Alinma Investment and Riyad Capital each has $18 billion in AUM, according to the Forbes list, which is based on the value of the companies’ total AUM as of December 2020.

Combined, the 30 listed companies control $258.2 billion in AUM. Saudi dominates the list with 16 entries, followed by the UAE with five entries. Combined, these two countries make up 70 percent of the ranking, Forbes said.

NCB Capital and Samba Capital & Investment Management Company will complete their merger in the third quarter of 2021, forming the biggest asset manager, brokerage, and investment bank in Saudi Arabia.

The Middle East’s 10 Biggest Asset Managers 2021

1.NCB Capital; Saudi Arabia; AUM: $50.4 billion
2. Investcorp; Bahrain; AUM: $35 billion
3. Alinma Investment; Saudi Arabia; AUM: $18 billion
4. Riyad Capital; Saudi Arabia; AUM: $18 billion
5. Wafa Gestion: Morocco; AUM: $14.4 billion
6. SHUAA Capital; U.A.E.; AUM: $14 billion
7. Al Rajhi Capital; Saudi Arabia; AUM: $13.3 billion
8. Kamco Investment; Kuwait; AUM: $13 billion
9. GFH Financial Group; Bahrain; AUM: $12 billion
10. Jadwa Investment; Saudi Arabia; AUM: $8.6 billion

Saudis May Work Longer, Pay More to Fill Pension Fund Gap - Bloomberg

Saudis May Work Longer, Pay More to Fill Pension Fund Gap - Bloomberg

Saudi Arabia is considering revamping the kingdom’s pension system to require citizens to work longer and contribute more, another hit to living standards that could undermine public support for Crown Prince Mohammed bin Salman’s efforts to reshape the oil-reliant economy.

The government -- faced with an estimated actuarial gap of 800 billion riyals ($213 billion) at the state-controlled pension fund -- is weighing proposals to increase the retirement age, according to three people familiar with the matter, who asked not to be identified to discuss confidential deliberations. It could also require workers to contribute more of their salaries to the General Organization for Social Insurance, or GOSI, which manages both public and private sector pensions, the people said.

A final decision on the details of the changes and whether to implement them has not yet been made, the people said.

Saudi officials have warned the current system is unsustainable. That’s a quandary pension programs the world over have faced as people have lived longer -- but with a decidedly Saudi twist.

Politics Seep Into Oil as Diverging Goals Test #Saudi-#UAE Ties - Bloomberg video

Politics Seep Into Oil as Diverging Goals Test Saudi-UAE Ties - Bloomberg

Like many relationships, the one between Saudi Arabia and the United Arab Emirates had long rested on two simple principles for when disputes arose: deal with them behind closed doors or bite your tongue.

After the neighbors’ very public spat over future OPEC+ oil output, that’s now looking hopelessly old-fashioned and the consequences are rippling out from the Persian Gulf.

Most obviously, the tussle has left a question mark over crude supply as major nations emerge from Covid lockdowns. OPEC+ abandoned its meeting on Monday without a deal, sending oil past $77.

But it also underlined a growing economic rivalry that’s been sharpened by the pandemic and has implications for global companies, as well as a political divergence with repercussions across the Middle East from Yemen to Israel, Iran to Qatar.

While no one’s saying ties are set to break down, the ground rules have shifted.

“More than 80% of the time, these two capitals are on the same page,” said UAE political science professor Abdulkhaleq Abdullah. “However, there is growing economic competition, it is growing deeper by the day, and we are still in the early stages of it.”

Oil slips after reaching multi-year highs on OPEC+ dispute | Reuters

Oil slips after reaching multi-year highs on OPEC+ dispute | Reuters

Oil prices slipped on Tuesday, driven by profit-taking in response to multi-year highs reached after OPEC+ producers clashed over plans to raise supply to meet rising global demand.

Brent crude was down $1.30 a barrel, or 1.7%, at $75.86 by 1354 GMT, having hit a session peak of $77.84 for its highest since October 2018.

U.S. West Texas Intermediate (WTI) crude futures traded down 47 cents, or 0.6%, at $74.69 after touching $76.98 for its highest since November 2014.

Ministers from OPEC+, which groups producers from the Organization of the Petroleum Exporting Countries (OPEC) with Russia and others, abandoned talks on Monday as negotiations failed to close divisions within the group.

No date for further talks has been announced.

MIDEAST STOCKS #Dubai drags major Gulf markets lower | Reuters

MIDEAST STOCKS Dubai drags major Gulf markets lower | Reuters

Major stock markets ended lower on Tuesday, as Saudi Arabia amended import rules from the Gulf in a challenge to the United Arab Emirates, with the Dubai index leading the losses.

Dubai's main share index (.DFMGI) fell 0.7%, weighed down by a 1.1% drop in Emirates NBD Bank (ENBD.DU) and a 1% decline in sharia-compliant lender Dubai Islamic Bank (DISB.DU).

Among others, Dubai's largest listed developer Emaar Properties (EMAR.DU) lost 1%. It expects to buy out minority shareholders of Emaar Malls (EMAA.DU) and delist the business by year-end. read more

Saudi Arabia's benchmark index (.TASI) lost 0.3%, with Al Rajhi Bank (1120.SE) falling 0.5% and Dr Sulaiman Al-Habib Medical Services (4013.SE) decreasing 1.3%.

The kingdom has amended its rules on imports from other Gulf Cooperation Council countries to exclude goods made in free zones or using Israeli input from preferential tariff concessions, in a bid to challenge the United Arab Emirates' status as the region's trade and business hub. read more

"The Saudi announcement will likely negatively affect companies in the Emirates in the short-term," said Daniel Takieddine, market analyst at FXPrimus.

The move should, however, create an economic impetus over the longer term as firms move to conform to the Saudi guidelines by increasing the industrial capacity and value addition created in the Emirates, Takieddine added.

In Abu Dhabi, the index (.ADI) gave up early gains to finish 0.2% lower, hit by a 0.5% fall in the country's largest lender First Abu Dhabi Bank (FAB.AD).

However, International Holding (IHC.AD) added 0.8%, extending gains for a seventh consecutive session.

IHC's market capitalisation hit 201.7 billion dirhams ($54.92 billion) last week, making it Abu Dhabi's most valuable listed company, after the market debut of Alpha Dhabi (ALPHADHABI.AD), in which IHC holds a 45% stake. read more

The Qatari benchmark (.QSI) was down 0.2%, with Qatar Navigation (QNNC.QA) shedding 2%.

Outside the Gulf, Egypt's blue-chip index (.EGX30) retreated 1.8%, as most of the stocks on the index were in negative territory including Fawry for Banking Technology and Electronics (FWRY.CA), which was down over 3%.

Analysis: OPEC disagreement lays bare growing #UAE-#Saudi economic rivalry | Reuters

Analysis: OPEC disagreement lays bare growing UAE-Saudi economic rivalry | Reuters

Abu Dhabi's Crown Prince Sheikh Mohammed bin Zayed al-Nahyan receives Saudi Crown Prince Mohammed bin Salman at the Presidential Airport in Abu Dhabi, United Arab Emirates November 27, 2019. WAM/Handout via REUTERS

Rare public disagreement between the United Arab Emirates and Saudi Arabia over OPEC policy points to a growing economic rivalry between the two largest Arab economies which only looks set to intensify, several regional analysts said.

The UAE's opposition this weekend to a proposed eight-month extension to output curbs, favoured by Saudi Arabia, was a rare display of defiance by Abu Dhabi, whose Crown Prince Mohammed bin Zayed al-Nahyan has been a staunch ally of Saudi Crown Prince Mohammed bin Salman.

The disagreement led the OPEC+ talks to be called off on Monday.

"The current OPEC standoff signals a wider push by the UAE to assert its economic and national self-interest vis-à-vis Saudi Arabia," said Amir Khan, senior economist at Saudi National Bank.

The alliance between the young ambitious princes had propelled a hawkish foreign policy that saw them launch a military campaign in Yemen, lead an Arab boycott of Qatar and combat Islamist political groups in the Middle East and beyond.

But as Saudi Arabia tries to wean its economy off oil, it is vying with the UAE for foreign capital and talent, although economists say it will take time to truly challenge the region's business, trade and tourism hub.

"There is this creeping economic competition in the relationship between the two biggest Arab economies and the competition is bound to intensify," said Emirati political analyst Abdulkhaleq Abdulla.

"The UAE is speaking its mind ... but the relationship is strong and the leadership know how to resolve issues," he said.

The UAE foreign ministry and the Saudi government communications office did not immediately respond to Reuters requests for comment on their economic and political relations.

While common perceived threats from Iran and Islamist groups in the region are likely to keep a lid on political differences, analysts say, the two states are seen as likely to increasingly butt heads on matters of economic sovereignty.

Riyadh has warned foreign firms they could lose out on state contracts if they do not set up regional headquarters in the kingdom by 2024 and in another challenge to the UAE's status as the region's trade and business hub, it this week amended rules for imports from Gulf states to exclude goods made in free zones, a major driver of Dubai's economy.

Several diplomats in the region have said the UAE-Saudi alliance has gone as far as it can as national economic interests take precedence, especially in the wake of the COVID-19 pandemic.

#Dubai's Emaar expects to delist malls unit by year-end | Reuters

Dubai's Emaar expects to delist malls unit by year-end | Reuters

Dubai's largest listed developer Emaar Properties (EMAR.DU) expects to buy out minority shareholders of Emaar Malls (EMAA.DU) and delist the business by year-end, a spokesperson said on Tuesday.

The all-share deal to make Emaar Malls a wholly-owned subsidiary of Emaar Properties was announced in March, less than a decade after shares in the malls unit were listed.

"We expect the entire merger process to complete before year end," an Emaar spokesperson said in response to Reuters queries.

Emaar Properties, which already owns close to 85% of Emaar Malls, will swap 0.51 of its own shares for each remaining share of Emaar Malls, the two companies said in March.

The Emaar spokesperson said on Tuesday that United Arab Emirates regulator the Securities & Commodities Authority (SCA) was reviewing the proposal "as part of the normal process."

"We are hopeful SCA will issue its final approval in the coming weeks."

Real estate tycoon Hussain Sajwani has delayed plans to delist DAMAC Properties (DAMAC.DU), the Dubai developer he founded, until the regulator completes a review of the transaction. read more

#Saudi Q2 earnings preview: SABIC to post $1.76bln net profit; STC at $750mln | ZAWYA MENA Edition

Saudi Q2 earnings preview: SABIC to post $1.76bln net profit; STC at $750mln | ZAWYA MENA Edition

Saudi Basic Industries Corporation (SABIC) is forecast to make a second quarter net profit of 6.63 billion Saudi riyals ($1.76 billion), on higher product prices and sales volumes, said Al Rajhi Capital (ARC) in a preview of financial results for Saudi equities.

NCB Capital (NCBC) has forecast 6.41 billion riyals Q2 net profit for SABIC. For the same quarter in 2020, the petrochemicals giant made a net loss of 2.22 billion riyals.

In its Q2 2021 earnings preview, Al Rajhi Capital said all petrochemical companies under its coverage are likely to post healthy earnings growth in Q2, helped by higher sales volume and increased product spreads.

SABIC affiliate, Yanbu National Petrochemical Company (Yansab) is projected to make 469 million riyals, compared to 45 million riyals net profit in the year-ago period. NCB Capital has a higher forecast of 641 million riyals for Q2.

Saudi Telecom, the Kingdom’s largest telecom operator, is expected to post net profit of 2.82 billion riyals, according to Al Rajhi Capital. “We expect STC's performance to remain stable with top-line and bottom-line rising 4.0 percent y-o-y and 3.6 percent, respectively,” the investment bank said.

According to NCB Capital, Zain KSA is forecast to make 41 million riyals, 30 percent lower y-o-y. ARC has forecast 43 million riyals, 26 percent lower y-o-y.

“We expect Zain KSA to remain under pressure on annual basis due to higher costs, offsetting healthy top-line growth,” it said.

In the food sector, Almarai Q2 is forecast at 621 million riyals and 579 million riyals by ARC and NCBC respectively. “Rising input costs to impact the gross margins but deleveraging to support overall net margins,” ARC said. Almarai made a net profit of 619 million riyals in Q2-2020.

Savola is likely to make a Q2 profit of 225 million riyals, according to ARC and 237 million riyals by NCBC. This compares with 410 million riyals Savola posted in the year-ago period.

“Top-line to remain flattish due to high base impact last year. Gross margins of food business could dilute slightly due to volatility in agro-commodity prices,” said ARC.

Among retailers, Jarir Marketing Co. is seen posting a net profit of 222 million riyals by NCBC and 225 million riyals by ARC, compared to 208 million it made in Q2, 2020.
Positive on healthcare

Within the healthcare sector, the Q2 2021 results are likely to remain positive. ARC said: “Overall, we expect revenue of healthcare companies under our coverage to grow by 41 percent year-on-year (y-o-y), while net profit is expected to grow by 66 percent y-o-y, reflecting growth in revenue and improvement in operating efficiency.”

Mouwasat’s Q2 will come in at 166 million riyals according to the brokerage, while NCBC has pencilled in 144 million riyals.

Meanwhile, cement companies’ results are also likely to be strong during the quarter, aided by growth in volumes on a y-o-y basis.

ARC estimates Arabian Cement to make 37 million riyals compared with 8 million in the year-ago period.; Saudi Cement will come in 4 percent higher at 79 million riyals, and Yamama Cement at 50 million riyals, up nearly 5 percent y-o-y.

#Dubai property sales transactions hit eight-year high of $4bn in June

Dubai property sales transactions hit eight-year high of $4bn in June

Dubai’s property sales transactions hit an eight-year high of Dh14.79 billion ($4.03bn) in June as segments of the market across the UAE benefitted from new demand and the continued economic rebound, according to listings portal Property Finder.

This is the highest value of monthly property transactions recorded by the emirate since December 2013, the portal said on Tuesday.

“The trends this year have certainly kept us on our toes, with month-on-month increases and record-breaking months for sales transactions, high investment demand from residents and foreign investment and property prices increasing across prime, popular communities,” said Lynnette Sacchetto, research and data director at Property Finder.

The UAE property market, which softened due to a three-year oil price slump that began in 2014 and oversupply concerns, is showing signs of recovery as people upgrade to larger homes with outdoor amenities amid a remote working and learning trend sparked by the Covid-19 pandemic.

OPEC+ in Crisis as Specter of Harmful Infighting Looms Again - Bloomberg video

OPEC+ in Crisis as Specter of Harmful Infighting Looms Again - Bloomberg

OPEC+ was plunged into crisis as a worsening fight between Saudi Arabia and the United Arab Emirates blocked an oil-supply increase.

What happens next will determine whether the breakdown of talks -- which sent Brent crude climbing toward $80 a barrel -- could escalate into a conflict as bitter and destructive as last year’s price war.

At stake is the stability of the global economic recovery amid growing inflationary pressures, and the ability of the producers’ alliance to retain its hard-won control over the oil market.

From international oil majors to Middle Eastern petrostates, the market will be watching keenly in the coming days as Riyadh and Abu Dhabi publish prices and negotiate volumes for their August crude supplies. The fear that events could spiral further out of control was evident.

“We do not want a price war,” said Iraq’s Oil Minister Ihsan Abdul Jabbar. “And we do not want oil prices to rise to more than the current levels.”

Spotify Rival’s Nasdaq Listing May Herald Mideast SPAC Boom - Bloomberg

Spotify Rival’s Nasdaq Listing May Herald Mideast SPAC Boom - Bloomberg

Spotify Technology SA rival Anghami’s listing via a merger with a blank-check company has triggered a flurry of interest from Middle-Eastern firms exploring similar deals in a region where they are a rarity.

Anghami had announced plans to merge with special purpose acquisition vehicle Vistas Media Acquisition Company Inc. in March. Since then, Vistas says it has got “an overwhelming response” from venture capital, private equity firms and entrepreneurs to explore opportunities.

“We strongly believe there are many similar hidden gems, like Anghami, in the region that can be considered not only by our future SPACs but even other SPAC teams for a successful business combination,” Saurabh Gupta, Vistas co-founder and board member, said in an interview.

SPACs are corporate shells that raise money from investors with the aim of merging with private businesses to take them public. While momentum for the vehicles has waned in the U.S. after the lackluster share performance of recent deals and greater regulatory scrutiny, enthusiasm is starting to catch on in the Middle East.

Financial services firm Shuaa Capital PSC is considering setting up three blank-check companies of around $200 million each, Bloomberg reported on Monday. Dubai-based FIM Partners last week raised $200 million in an IPO of a SPAC on Nasdaq and Mubadala Investment Co. is weighing two deals, the Financial Times said last week.

Vistas is led by Chief Executive Officer F. Jacob Cherian, a former associate at JPMorgan Chase & Co., and co-founders Abhayanand Singh, the head of the Singapore-based media investment company behind the SPAC, and Gupta, a former banker and co-producer of several films.

Gupta said Vistas is looking for companies in high growth sectors and industries like media, consumer technology and healthcare.

The coronavirus pandemic “created an opportunity for a boom in the digital content and media space,” he said. “Things are going to go upwards from here, especially for the MENA region.”

#SaudiArabia Plans $147 Billion Expansion for Transport Sector - Bloomberg

Saudi Arabia Plans $147 Billion Expansion for Transport Sector - Bloomberg

Saudi Arabia plans to invest 550 billion riyals ($147 billion) in transport and logistics over the next nine years as Crown Prince Mohammed bin Salman looks to turn the kingdom into a global aviation hub.

About 35% of that spending will come from the government and the rest from the private sector as officials launch a new international airline, expand airports, build a broader train network and explore new technologies, Transport Minister Saleh Al Jasser said Monday.

“Many of the targeted projects are bankable projects, attractive projects,” the minister said in an interview in Riyadh. “This will open big opportunities for partnership with the private sector, whether local or international.”

• A “major expansion” of airport infrastructure in Jeddah and Riyadh
• Pushing forward with plans to build a train linking Jeddah with Riyadh and the East coast. Al-Jasser said he expects a consortium of foreign companies to deliver a proposal later this year on delivering the “land bridge” project
• Exploring the use of futuristic technologies like Hyperloop and the new generation of Maglev
• The new airline is expected to launch “as soon as possible,” Al Jasser said. “It won’t take many years before this airline is operational.”

European, Middle Eastern & African Stocks - Bloomberg #UAE #Kuwait #Israel #SaudiArabia #Qatar mid-session

European, Middle Eastern & African Stocks - Bloomberg #UAE #Kuwait #Israel #SaudiArabia #Qatar mid-session

Oil prices extend gains after OPEC+ talks called off | Reuters

Oil prices extend gains after OPEC+ talks called off | Reuters

Oil prices extended gains to hit some of their highest levels since 2018 after OPEC+ discussions were called off, heightening expectations that supplies will tighten further just as global fuel demand recovers from a COVID-19-induced slump.

Brent crude climbed 18 cents or 0.2% to stand at $77.34 a barrel by 0542 GMT, after gaining 1.3% on Monday. An earlier session peak of $77.61 was its highest level since October 29, 2018.

U.S. West Texas Intermediate (WTI) crude futures were at $76.57 a barrel, up $1.41 or 1.9% from Friday’s close. There were no settlements on Monday, a U.S. holiday to mark Independence Day.

It hit $76.77 a barrel earlier on Tuesday, just shy of an October 2018 peak of $76.90.

Ministers of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, abandoned oil output talks and set no new date to resume them, after clashing last week when the United Arab Emirates rejected a proposed eight-month extension to output curbs.