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Middle East & African Monitor – 03 April 2017

  • Kushner in surprise visit to Iraq as his official responsibilities increase
  • “Oil may hit US$70 by year end” – Andurand Capital
  • Nigerian tanker drivers begin strike action
  • Kuwait refinery shutdown to tighten fuel oil supply
  • PetroChina ponders participation in Aramco IPO
  • Egypt’s FX reserves rose in March
  • Tunisia keeps interest rates steady
  • Zambian & Ugandan inflation rates slow
  • Ghana conducts debut 15 Year GHS bond issue

REGIONAL COMMENTARY

Kushner in surprise visit to Iraq as his official responsibilities increase
Jared Kushner, President Trump’s senior advisor and son in-law, is currently undertaking a surprise visit to Iraq along with the chairman of the joint chiefs of staff, a trip which the Guardian newspaper claims was initiated by Kushner himself as he wanted to personally understand the situation on the ground there. Since Trump’s inauguration Kushner’s portfolio has widened extensively and now includes; Presidential staffing, improving and modernising the government’s domestic operations plus defining both the US’s Middle East and trade policies. The power this 36 year-old with zero previous political or diplomatic experience now wields cannot be understated, and this was highlighted by a Washington Post article published last month which suggested that Kushner is now “the primary” point of contact for world leaders, ministers and ambassadors from than 24 countries including China. His involvement in the Middle East is however not such a surprise as Trump had already publically acclaimed Kushner as the ‘best’ person to broker a peace agreement between the Israelis and the Palestinians before he came into office, but his growing workload and influence does make one wonder how this affects the responsibilities of the US Secretary of State, and perhaps even the President himself.

“Oil may hit US$70 by year end” – Andurand Capital
One of the managing partners of Andurand Capital, Pierre Andurand, was quoted by CNBC at the end of last week suggesting that crude prices could hit US$70 by the end of this year. "I think oil prices are likely to recover to around US$70. I think the market will switch to backwardation, sustainable backwardation by late summer and that will bring the next wave in oil prices,” Andurand stated adding; "U.S. shale producers have been hedging a lot of their production, capping prices, so the improvements in fundamentals were not priced in at all, but I believe that now when people will really see that inventories are going down fast, that eventually the fundamentals will win and prices will go higher." His firm was one of the few who accurately predicted the recent oil market crash and was declared the winner of this year’s EMEA Investor’s Choice Award.

Nigerian tanker drivers begin strike action
Fuel tanker drivers in Nigeria are reportedly following through with their threatened national strike action today in protest against what they claim are bad working conditions and poor salaries. “For the past three years tanker drivers have been appealing to the Nigeria Association of Road Transport Owners to increase their salary, but they refused on the ground that spare parts had increased. NARTO also said that the government has not increased their fares, so they will not increase salaries. Apart from this, most of the roads they ply are bad and this has resulted in accidents or damage to their trucks, while the activities of the official of Nigeria Security and Civil Defence Corps on the roads is not helping the matter. The tanker drivers are forced to break the seal of their product on the pretext that they were carrying adulterated product, most of these drivers are harassed by these officers, at times the tanker and the driver will be detained for close to a month,’’ Alhaji Tokunbo Korodo, a senior official at Nigeria’s Union of Petroleum and Natural Gas Workers claimed yesterday, according to the local ‘Pulse’ newspaper. There is also talk doing the rounds that petrol station workers could join the drivers’ strike. Meanwhile Shell Nigeria has been forced to shut down one of its two pipelines that carry light crude to the main export terminal. The company said that this temporary closure was necessary in order for it to “remove a significant number of oil theft connections and repair any leaks on the pipeline.”

Kuwait refinery shutdown to tighten fuel oil supply
Kuwait’s electricity provider will likely be forced to import fuel for a set period of time following the permanent closure of the country’s oldest refinery last week, according to the CEO of Kuwait National Petroleum, Mohammad Ghazi al Mutairi. “Kuwait will need to import fuel oil to meet electricity generation needs for about a year," al Mutairi was quoted as saying, adding that the country used around 120,000bpd of fuel during the summer and 70,000 bpd during winter to meet its domestic power demand. The gap will eventually be filled by the new al-Zour refinery which is set to be commissioned in 2019.

PetroChina ponders participation in Aramco IPO
The vice chairman of China’s main oil and gas producer, Wang Dongjin, said last week that PetroChina was conducting detailed discussions with Saudi Aramco officials, including the Chinese firm’s potential participation in Aramco’s eagerly awaited IPO. “PetroChina will study the opportunity according to market conditions and national interests,” Dongjin was quoted as saying by the South China Morning Post, adding that ongoing talks between the two energy giants also included Aramco’s interest in investing in an oil refining and petrochemical project currently being built by PetroChina in Yunnan province, and the deployment of PetroChina technology to enhance the output of Aramco’s own oil projects in Saudi Arabia.

Egypt’s FX reserves rose in March
The Deputy Governor of Egypt’s Central Bank, Ramy Aboul Naga, said yesterday that they expect the country’s net international reserves to have increased to US$28.5 bio in March. However latest official data also shows that the country’s foreign debt increased by more than 40% last year to reach US$67.3 bio by the end of 2016, while domestic debt rose by 28.90% y/y to EGP 3.05 trillion, 85% of which is owed by the government.

Tunisia keeps interest rates steady
Tunisia’s Central Bank kept its benchmark rate unchanged at 4.25% following its regular MPC meeting last Friday.

Zambian & Ugandan inflation rates slow
Zambia’s inflation rate declined slightly in March to 6.70% y/y compared to 6.80% in February and 7.50% at the end of last year. A similar story was displayed by Uganda which saw its inflation rate dip to 6.40% y/y in March against 6.70 % for the previous month.

Ghana conducts debut 15 Year GHS bond issue
Ghana raised GHS 3.42 bio in its first ever 15-year domestic bond issue last Friday. The auction was open to both local and foreign investors and offered a yield of 19.75%.

03-04-2017

AND FINALLY…
Did you know that the Ghanaian Empire was built on trade in salt and gold, which is why British merchants later called it the Gold Coast?

Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
MarketInsights&Strategy@nbad.com
Tel: +971 2 6110 127

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NBAD Middle East & African Monitor – 03 April 2017

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