Latest Oil Prices, Market News and Analysis for September 7 - Bloomberg
Oil prices dropped after a nine-session rally — driven by renewed production cuts from leaders of the OPEC+ alliance — propelled futures into overbought territory.
West Texas Intermediate settled below $87 a barrel after the longest stretch of gains since January 2019. That surge came as Saudi Arabia and Russia pledged to prolong their export curbs through the fourth quarter.
Now, crude faces headwinds from wider markets, with the dollar on track for an eighth consecutive week of gains. WTI was also trading in overbought territory, based on its relative strength index, leaving traders braced for a technical correction.
Focus: How the Saudis became a top shareholder in Telefonica, Spain's telecoms giant | Reuters
Jose Maria Alvarez-Pallete, chairman and chief executive of debt laden Spanish telephone and internet service company Telefonica, got an unexpected call this week when he was in Silicon Valley to meet companies and investors in America's tech capital.
He learned Saudi Arabia's largest telecoms operator, STC Group, aimed to be Telefonica's biggest shareholder, with an interest of 9.9%. Within hours of Tuesday's call, Alvarez-Pallete was en route to Riyadh, according to people with knowledge of the situation.
STC had spent months building its 2.1 billion-euro ($2.25 billion) stake, said the people, requesting anonymity because of the sensitivity of the matter. The move is a vote of confidence in Telefonica, burdened by billions of dollars in debt while STC gains expertise to modernize Saudi telecoms infrastructure.
But some in Spain worry the deal could give Saudi Arabia too much sway over the country's telecom and internet infrastructure.
STC is 64% owned by Saudi Arabia's Public Investment Fund (PIF), the main engine of Crown Prince Mohammed bin Salman's Vision 2030 effort to build stakes in a variety of global companies and wean the Saudi economy off its dependence on the oil that made it one of the world's richest nations.
STC hopes the ties with Telefonica will help it develop digital cities in Saudi Arabia, importing technological know-how from countries like Spain, according to a person who had advised the company. For Telefonica, whose market value has sunk to a third of its level eight years ago, the investment offers long-suffering shareholders some respite.
Gulf bourses end mixed; Saudi posts biggest weekly loss in a month | Reuters
Stock markets in the Gulf ended mixed on Thursday on worries that stubborn U.S. inflation could keep interest rates higher for longer, with the Saudi index posting its biggest weekly loss since early August.
Saudi Arabia's benchmark index (.TASI) declined 0.7%, dragged down by a 1.5% fall in Al Rajhi Bank (1120.SE) and a 1% drop in Dr Sulaiman Al-Habib Medical Services (4013.SE).
The International Monetary Fund expects GDP growth in Saudi Arabia to slow further from the current 1.9% forecast to reflect the latest extension of oil production cuts, an agency official said, even as non-oil growth is seen remaining strong.
On the flip side, Saudi Telecom Company (STC) (7010.SE) finished 1% higher, a day after declining 2.2%. Spain is analysing STC's purchase of a 9.9% stake in Telefonica (TEF.MC) to ensure that its strategic interests are upheld, signalling a potential hurdle.
The Saudi index posted a weekly loss of 2.4%.
Dubai's main share index (.DFMGI) gained 0.5%, ending three sessions of losses, led by a 5% jump in Emirates Central Cooling Systems (EMPOWER.DU).
In Qatar, the benchmark (.QSI) advanced 1%, as most of the stocks on the index were in positive territory including petrochemical maker Industries Qatar (IQCD.QA), which gained 3%.
The Qatari stock market stabilized to a certain extent after recording losses during the last few weeks, returning to the lower end of this year's range, said Khaldoun Hilal, chief executive officer at KAMA Capital.
"However, it could remain exposed to the volatility in natural gas prices."
Outside the Gulf, Egypt's blue-chip index (.EGX30) closed 0.8% higher.
Headline inflation in Egypt is expected to surge to a new record high in August after having broken records in both June and July, a Reuters poll showed on Tuesday, with tobacco, culture and recreation prices increasing.
Is Quiet Diplomacy Reshaping Middle East Relations? - Bloomberg
There have been no grand summits or Rose Garden handshakes. But a series of incremental diplomatic developments are quietly remaking the Middle East.
After a seven-year rift that helped stoke one of the region’s ugliest conflicts, Iran and Saudi Arabia exchanged ambassadors this week.
The United Nations nuclear watchdog confirmed Tehran has slowed its enrichment of near weapons-grade uranium. And US officials have been shuttling back and forth for back-channel talks that increasingly look like a nuclear deal by stealth — all while working to broker Saudi normalization with Israel.
For Saudi Crown Prince Mohammed bin Salman, the logic is clear. The eight-year conflict with Iranian-backed rebels in neighboring Yemen was threatening oil facilities and distracting from his big plans to transform the economy.
Saudi Construction Boom Hands Firms Contracts Worth $250 Billion - Bloomberg
Saudi Arabia has awarded construction contracts worth $250 billion since 2016, when the kingdom embarked on an ambitious plan to build mega projects and transform its economy.
Property and infrastructure projects valued at $1.25 trillion have been announced across the country including the high-tech new city of Neom, on the kingdom’s west coast, according to property consultant Knight Frank LLP. The government has also unveiled vast new tourism and entertainment projects that aim to attract visitors from around the world, while also encouraging Saudis to spend more domestically.
“Saudi Arabia will become the world’s largest construction site,” said Faisal Durrani, head of Middle East research at Knight Frank. “It is a mammoth task,” he said, and “modern methods of construction like 3D printing, modular construction and off-site manufacture must be embraced.”
The so-called giga projects are key to Saudi Arabia’s plans to transform itself into a top tourism destination and to move its economy away from its hydrocarbon dependency. To help achieve its ambitious targets, the kingdom has pledged to spend hundreds of billions of dollars. It’s also launching a new airline and a fresh airport as part of the 2030 plan led by the country’s de facto ruler Crown Prince Mohammed bin Salman.
Mining Finance: Saudi Arabia Invests in Copper, Nickel Mines - Bloomberg
A $2.6 billion deal announced last week has set the stage for a potentially landmark shift in the metal and mining investment landscape: the arrival of Saudi Arabia as a pivotal player.
The agreement with Vale SA gives the kingdom a 10% slice in one of the world’s crucial suppliers of nickel and copper — essential metals needed to decarbonize. It’s also held other talks, including with Barrick Gold Corp. about investing in a big Pakistan copper mine, according to people familiar with the matter. Speaking privately, executives at top miners said the value of Thursday’s deal made clear that the Saudis are ready to splash cash around.
The move comes as the question of who controls the commodities needed to both sustain and decarbonize the world’s economies has turned into a global flashpoint, jumping to the top of agendas in the US and Europe.
China has for years been the dominant buyer and a key source of funding, as it sought to secure supply for its rapid industrialization. But as tensions with the West have mounted, the mining industry is now facing increased pressure to look elsewhere.
Vision 2030: Saudi Arabia's Crown Prince Looks to Metals As New Source of Wealth - Bloomberg
In scorching summer heat, Renier Swiegers marches through the desert toward a drilling rig. He’s not looking for oil, the dynamo of Saudi Arabia’s economy the past 80 years, though. It’s another potential source of wealth and influence the kingdom now has its eye on.
Having already used its energy riches to upend the worlds of sports, tourism and movies, Saudi Arabia’s Crown Prince Mohammed bin Salman is prepared to pour billions of dollars into tapping the more than $1.3 trillion of metals his government says is buried in places like this.
The plan may be among the less glamorous components of his grand Vision 2030 to transform the Saudi economy. The prospect of turning the country into a metals hub that can make a dent in a global industry also has no shortage of skeptics. But Saudi Arabia’s 38-year-old de-facto leader has no shortage of wealth or ambition. Key will be convincing international mining companies it’s worth their while.
If only partially successful, the dream would have implications beyond the Middle East, not just for metals mining but also Saudi Arabia’s relations with the US, China and the emerging markets the kingdom is inching closer to.
Saudi Arabia's economy grows 1.2% in Q2 | Reuters
Saudi Arabia's economy grew 1.2% in the second quarter, year-on-year, government data showed on Thursday, with non-oil growth vastly outperforming overall growth, which decelerated sharply from last year on the back of a decrease in oil activities.
Oil sector activities declined by 4.3% in the second quarter from the same period a year ago, data from the General Authority for Statistics showed, but non-oil activities surged 6.1%, driven by domestic demand.
Earlier official estimates had indicated GDP growth of 1.1%in Q2.
Saudi Arabia’s economy grew 8.7% last year, allowing it to record its first budget surplus in almost a decade. But cuts to production this year and lower prices have hit oil revenues and will weigh on growth.
Most Gulf markets gain, Saudi falls as IMF forecasts slowdown in growth | Reuters
Most major stock markets in the Gulf rose in early trading on Thursday, shrugging off concerns around global economy, while the Saudi index eased as the International Monetary Fund (IMF) expects the kingdom's economic growth to slow.
The IMF expects GDP growth in Saudi Arabia to slow further from the current 1.9% forecast to reflect the latest extension of oil production cuts, an agency official said, even as non-oil growth is seen remaining strong.
Saudi Arabia's benchmark index (.TASI) dropped 0.3%, with Al Rajhi Bank (1120.SE) losing 0.6% and Dr Sulaiman Al-Habib Medical Services (4013.SE) declining 0.7%.
Oil prices - which fuels the Gulf economy - eased as worries over demand due to a seasonal slowdown during winter and an uncertain economic outlook for China outweighed expectations of tighter supplies from extended production cuts in Saudi Arabia and Russia.
Elsewhere, Saudi Telecom Company (STC) (7010.SE) traded flat, a day after declining 2.2%. Spain is analysing STC's purchase of a 9.9% stake in Telefonica (TEF.MC) to ensure that its strategic interests are upheld, signalling a potential hurdle.
Dubai's main share index (.DFMGI) gained 0.3%, led by a 3.1% rise in toll operator Salik (SALIK.DU).
Separately, the United Arab Emirates Federal National Council Speaker, Saqr Ghobash, will visit China during Sept. 8-16, Chinese state news agency Xinhua said on Wednesday.
In Qatar, the index (.QSI) added 0.4%, as most of the stocks on the index were in positive territory including petrochemical maker Industries Qatar (IQCD.QA), which advanced 1.3%.
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