NBAD Middle East & African Monitor - 28 November 2016
An agreement on oil production – will they or won’t they?
Expect a volatile week for crude prices as we approach the 30th of November OPEC meeting, and as a potential oil production agreement which had appeared to be within touching distance last week, is again being questioned. The latest round of pessimism was driven by news that Saudi Arabia will not attend a technical discussion session with Kazakhstan and Russia in Vienna today, and by Iranian accusations that the Kingdom was waging “a psychological war.” According to Forbes magazine, Saudi Arabia’s reason for withdrawing from the meeting today was because it wants to prioritise an OPEC agreement first, before other producers are brought into the fold. However with Iraq now seemingly willing to participate, and despite its public protestations Iran also appearing open to some sort of deal, there is still a fair chance of an agreement being reached before the week is out. In order for a consensus agreement being able to meet the targets previously outlined in Algiers, and for it to make any sort of dent in the current glut, OPEC would need to cut its output by at least 900,000 bpd. Meanwhile Goldman Sachs has apparently begun to turn bullish on oil prices, with their latest analysis forecasting an average price of US$55 per barrel during H1 2017, and suggesting that the crude market will enter into a deficit during the 2nd half of next year with or without an OPEC production agreement.
Iran eyes naval bases in Yemen & Syria
The Iranian army’s chief of staff, General Mohammad Hossein Bagheri, has been quoted by the state-controlled media outlet, Tasnim, as saying that his country was keen to eventually establish a naval presence in both Syria and Yemen. “Having naval bases in remote distances is not less than nuclear power. It is ten times more important and creates deterrence, thus maybe, at some point we will need bases on the shores of Yemen and Syria,” Bagheri stated adding, "When two thirds of the world's population lives near shores and the world economy depends on the sea, we have to take measures, although there is a need for time to take these steps and for infrastructure to be established first.” His comments echo those made by Ayatollah Khamenei last year when Iran’s Supreme Leader suggested that the future of power is based on having “a powerful presence on the seas.”
Egypt again denies rumours of military involvement in Syria
Egypt’s Foreign Ministry has dismissed media reports over the weekend, that its army was actively participating in combat operations in Syria against anti-government forces. “These claims exist only in the imagination of those who spread them. There are constitutional and legal procedures that are taken before sending any Egyptian soldier or armored vehicle outside of state borders. Those procedures cannot be taken without the Egyptian people's knowledge," an official spokesperson was quoted as saying by the Ahram newspaper. According to Article 152 of the constitution, the President cannot deploy the Egyptian military on foreign combat missions without first consulting with the ‘National Defence Council’ and obtaining a majority approval from the House of Representatives.
Opposition make strong gains in snap Kuwait election
Opposition candidates, consisting primarily of Islamists, liberals and nationalists, managed to secure 24 of the 50 parliamentary seats available following Kuwait’s latest election. This outcome and judging by the comments already made by certain incoming MPs, suggests the government is likely to face a renewed challenge in passing further austerity linked bills through the national assembly. Kuwait is forecast to record a deficit of 3.00% of GDP during the 2016/17 fiscal year.
Kenyan CB expected to keeps rates on hold
Kenya’s Central Bank is expected to keep its benchmark interest rate unchanged at 10% following today’s scheduled MPC meeting.
Volkswagen signs JV agreement in Algeria
Volkswagen has signed a joint-venture agreement with Algeria’s SOVAC to assemble up to 100 VW vehicles a day at a new plant in the industrial zone of Sidi Khatab from June 2017. Volkswagen AG will hold a minority stake in the new joint venture.
Petrojet wins Oman contract
The Egypt based oil and gas services firm, Petrojet, has been awarded a contract to build a gas pipeline in Oman’s Duqm city.
Did you know that Cairo is home to more than 50% of all the Uber drivers in Africa?
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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