NBAD Middle East & African Monitor - 12 December 2016
Oil prices rise as Saudi Arabia suggests deeper production cuts
Oil prices surged again overnight following the news that a number of non-OPEC members would join the organisation’s production cut plan and reduce their own output by 558,000 bpd, while the Kingdom’s Oil Minister, Khalid al Falih, also surprised many by announcing yesterday that his country could slash its output even further in the new year. “I can tell you with absolute certainty that effective January 1st , we’re going to cut and cut substantially below the level that we have committed to on November 30th ,” al Falih stated. His comments underline the clear commitment of the world’s largest producer to try and drag the oil market back into balance. Amongst those non-OPEC members agreeing to a reduction of their daily production levels were; Russia with a cut of 300,000bpd, Mexico - 100,000bpd, Azerbaijan - 35,000bpd, Kazakhstan - 20,000bpd and Oman by 40,000bpd.
Boeing’s US$16 Bio Iran deal will likely face opposition in US Congress
Boeing has signed a US$16.6 bio agreement to supply Iran Air with 80 new commercial jets. However although the deal has received the official approval of the US Treasury it may still be challenged by the incoming administration, and by a Republican led Congress next year. Already a spokesperson for the Republicans Illinois representative, Peter Roskam, warned; “We will aggressively fight this deal in next Congress, though we probably won't even need new legislation to do it,” the spokesman said adding that, “The incoming appointees at Treasury and State will no longer report to a White House willing to bend over backward and ignore national security concerns in order to keep Iran from walking away from the nuclear deal.” Roskam, along with several other GOP representatives had previously sent a letter to Boeing calling on the firm to avoid doing any business with Iran until the regime there renounced its “support for terror groups.”
Opposition candidate wins Ghana’s presidential election
Ghana’s opposition leader, Nana Akufo-Addo, won last week’s Presidential election by 53.80% of the vote against the 44.40% achieved by the incumbent John Mahama. The President-elect has said he has plans to boost Ghana’s economy, which has shrunk markedly over the past few years due to a combination of reasons such as fall in the price of its main commodity-related exports and a lack of investment in upgrading and maintaining the country’s infrastructure. The latter issue triggered a major power shortage which crippled the country’s manufacturing sector and forced the government into asking for assistance from the IMF. He has also promised to crack-down on corruption but added that he would not look to target members of the outgoing administration. “I am fully committed to pursuing an anti-corruption drive ‘across-the-board,’ as you put it, which will be fully anchored in the rule of law and strict respect for due process, that is the best form of security for every citizen of the country,” he stated adding, “There can be no room in such an undertaking for witch-hunting or acts of political vendetta or harassment. No member of the NDC has anything to fear from my future government.”
“Spending Cuts are Inevitable” – Kuwait’s Emir
The Emir of Kuwait, Sheikh Sabah Al-Ahmad Al Sabah, was quoted as saying during the opening of the country’s newly appointed parliament yesterday, that the fall in global energy prices means Kuwait faces a large budget deficit this year, and as such measures have to be taken to counter this. "I am confident that parliament and my brother citizens are all aware that reducing public expenditure is inevitable through well-studied measures," the Emir stated, although advising that any proposed austerity measures must protect low income earners and ensure social justice. The government’s recent austerity measures, including a hike in fuel and electricity prices, have been vociferously criticised by opposition MPs despite the fact that for the 2015/16 fiscal year the country posted its first budget deficit in 16 years, and that the government spent KWD 3.78 bio on subsidies alone last year.
Two major LNG firms in Qatar are set to merge
The CEO of Qatar Petroleum, Saad al Kaabi, announced over the weekend that the world’s two largest natural gas producers, RasGas and Qatargas will soon be merged in order to increase efficiency and reduce costs. "Of course a cost reduction will be realised and it will make us more competitive in the market. It's one business that will do the same thing, putting it all in one place gives you a much bigger advantage in marketing,” al Kaabi stated. The merger will take around 12 months to complete and the combined firm will be called Qatargas.
Morocco prepares to Launch debut SUKUK
Morocco’s Finance Minister, announced late last week that the country planned to conduct its first ever government-backed Islamic bond issuance during the first half of 2017. It is not clear yet however what the size or the tenor of the bond will be. “For the operationalization of the first participatory programs on the capital market and the support of participatory finance, our department is looking, firstly, to develop the regulatory framework necessary for the issuance of the SUKUK in Moroccan financial markets, and on the other hand, and secondly, to structure the first sovereign SUKUK issue, which will serve as a benchmark for other similar initiatives,” Mohammed Boussaid stated.
KSA & Bahrain ponder new causeway project
A committee is set to consider the viability of the construction of a new causeway between Saudi Arabia and Bahrain, which is aimed at easing the congestion issues currently experienced by the existing 25km bridge that spans the two countries, and which was opened in 1986. According to a report in Gulf News, the newly proposed causeway would include passenger and commercial rail lines that would eventually be connected to the GCC wide railway network which is currently under construction. Funding for the bridge would come from the private sector.
Did you know that Ghana has the 3rd lowest rate of gun ownership in the world, while the US has the highest?
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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