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Middle East & African Monitor – 10 May 2017

  • IEA Says Demand For Oil Will Exceed Supply If Output Cuts Extended
  • Iran Tests New High-Speed Torpedo
  • Saudi Arabia May Tap International Bond Market Again
  • Nigeria Seeks US$5 Bio Loan From World Bank – CB Attempts To Clear FX Backlog
  • Tunisia Plans Debut SUKUK Issue
  • Pace Of Inflation In Egypt Begins To Slow
  • Qatar/Deutsche Bank Reports Denied
  • Saudi Arabia Plans ‘Entertainment’ City

REGIONAL COMMENTARY

IEA Says Demand For Oil Will Exceed Supply If Output Cuts Extended
The Head of Research at the IEA, Neil Atkinson, claimed today that the crude market was finally moving towards a supply deficit and this should speed up during the second half of this year, if the OPEC/NOPEC signatories to last December’s production cut deal agree to extend the program for a further 6 months. “It is starting to become clear that if the objective of the cuts was to flip the market from surplus into deficit, that is now slowly beginning to happen,” Atkinson stated. His views were supported by a senior strategist at Goldman Sachs, Jeff Currie, who like Atkinson was speaking at the Platts conference in London today, and who suggested that now could be a good time to buy crude futures as a supply deficit was drawing closer. Currie also warned that if a proposed border-adjusted tax in the US was implemented it would “blow” WTI prices sharply higher. The White House is currently considering a Republican led proposal for a 20% tax on all imported products including oil, which in turn would raise the cost of domestically produced crude as well.

Iran Tests New High-Speed Torpedo
The Iranian Navy has reportedly tested a locally manufactured ‘Hoot’ torpedo, which can allegedly travel at speeds of over 200 mph and is based on an identical Russian version called the VA-111 Shkval. According to the global defence research institute, Janes 360, the weapon apparently uses a technique called ‘supercaptivation’ which vaporizes the water around it and has an effective range of 11km, however it’s not clear if the Iranian test, which was conducted this past weekend was successful or not.

Saudi Arabia May Tap International Bond Market Again
The head of the finance committee within Saudi Arabia’s Council of Economic and Development Affairs, Mohammed Al Tuwaijri, was quoted by Bloomberg as saying yesterday that the Kingdom could conduct another international bond issue during Q4 of this year. Such a sale would depend on market conditions at the time but the size could reach US$10 bio, Al Tuwaijri stated, adding that the government was also planning to raise up to SAR 70 bio this year via local bond issuances during 2017.

Nigeria Seeks US$5 Bio Loan From World Bank – CB Attempts To Clear FX Backlog
According to Nigeria’s Minister of Power, Works and Housing, Babatunde Fashola, his government is looking for US$5.2 bio from the World Bank to help renovate and expand Nigeria’s dilapidated electricity grid. This proposal comes on top of a separate request for US$2.5 bio to help improve the distribution of power, expand transmission-capacity and increase access to electricity in rural areas of the country. Meanwhile the Central Bank is reportedly preparing to conduct inject further US$ liquidity into the secondary market via specific FX sales aimed at clearing some of the hard currency demand backlog. These additional dollars will only be made available for clients with already matured FX obligations covering agricultural, airline and petroleum products.  

Tunisia Plans Debut SUKUK Issue
According to a recent statement issued by NASDAQ Dubai, the Tunisian government is preparing to conduct a US$ denominated Islamic bond issuance soon. No further details have been announced as yet but Tunisia’s former Finance Minister had suggested back in January this year that such an issue could total up to US$500 mio.

Pace Of Inflation In Egypt Begins To Slow
While Egypt’s urban inflation rate rose to a 30 year high of 31.50% last month, CPI slowed to 1.80% m/m compared to 2.10% in April and 4.30% in January. The Central Bank of Egypt’s next MPC meeting is due to take place on the 21st of May.

Qatar/Deutsche Bank Reports Denied
Two as yet unnamed official sources were quoted by Reuters this afternoon denying an earlier rumour that Qatar had approached the German regulators for approval to increase its stake in Deutsche Bank to more than 10%. Both the regulator and the bank have thus far declined to comment on the original story.

Saudi Arabia Plans Major ‘Entertainment’ Complex
The Kingdom has unveiled plans to construct a 334 square mile complex which will eventually contain cultural, sports and entertainment activities including a safari park, in Al Qidiya which is just southwest of the capital Riyadh. According to a statement by the Deputy Crown Prince, Mohamed bin Salman, and published on the Arab News website this new development falls within the ‘Vision 2030’ transformation plan and will become; “A prominent cultural landmark and an important center for meeting the future generation’s recreational, cultural and social needs in the Kingdom.”

10-05-2017

AND FINALLY…
An Abu Dhabi based firm is reportedly planning to tow icebergs from Antarctica to the Middle East and convert the ice into drinking water.

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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