Middle East & African Monitor – 11 April 2017

  • Geopolitical concerns a Filip for oil prices
  • Nigeria’s currency is overvalued by 10-20% - IMF
  • Iran Air order with ATR remains unclear
  • Current USD/QAR peg is “Appropriate” – IMF
  • Saudi Arabia launches Debut SUKUK Issue
  • S&P affirms Ghana ratings
  • Inflation rises in Tanzania
  • Oman & Kuwait plan US$7 Bio refinery


Geopolitical concerns a Filip for oil prices
Crude prices edged further higher yesterday driven by the recent rise in geopolitical tensions in the Middle East and Asia, and by news that output from Libya’s largest field had been disrupted yet again by militant activity on Sunday. In the US, and although oil stock levels remain high, petrol demand is continuing to increase while refineries are close to completing their regular maintenance sessions and preparing for the summer driving season. Meanwhile according to a recent report by the Organization of Arab Petroleum Exporting Countries the eleven member states that make up the OAPEC group have combined proven oil reserves of 710 bio barrels, this accounts for 55.60% of the world’s total.

Nigeria’s currency is overvalued by 10-20% - IMF
Speaking after his agency’s latest review on Nigeria, the IMF’s mission head in the West African region claimed that the Naira was overvalued, and again called on the government to amend its current exchange rate policy. "We do find there to be some over-valuation at this point of the Naira, of the official currency, somewhere to the tune of 10 to 20%," Gene Leon was quoted as saying. USD/NGN was exchanging hands around 405.00 in the unofficial parallel market yesterday following its move back above 400.00 late on Friday, and compared to the latest official interbank rate of 317.00.

Iran Air order with ATR remains unclear
A number of Iranian media outlets claimed this week that the country’s state owned airline had concluded an agreement to buy 20 passenger aircraft from ATR. However the France based firm was later quoted via the ‘FlightGlobal ‘website as saying that it had "no updates" to the preliminary agreement previously reached between the two sides, and that the company was "still working to finalize the deal". Progress on the order had been delayed previously due to concerns expressed by the supplier of engines for the aircraft, Pratt & Whitney Canada, which were apparently linked to clarification over Canada’s remaining economic sanctions on Iran.

Current USD/QAR peg is “Appropriate” – IMF
The IMF has said in their latest country review of Qatar, that its current peg against the US dollar which has been in place since 1986 remains appropriate. “The peg has simplified the conduct of macroeconomic policy and provided a credible anchor for economic stability,” the agency’s statement read, but added that the government needed to gradually enact some further fiscal adjustments, in order to reduce the current account deficit to a sustainable level over the medium term. Meanwhile according to a Reuters report Qatar’s Central Bank is set to offer 3, 5, 7 and 10 year bonds at rates of 2.75%, 3.35%, 4.00% and 4.50% respectively. Bidding will open this coming Thursday and the final allocations announced on Sunday.

Saudi Arabia launches Debut SUKUK Issue
Saudi Arabia is conducting its first US Dollar Islamic bond issue this week, which consists of 5 and 10 year tranches, and has set its initial price guidance at 115bp and 155bp above midswaps for each tenor. The size of the issuance could be as much as US$10 bio.

S&P affirms Ghana ratings
Standard & Poors recently affirmed Ghana’s long and short term foreign and local currency ratings at B-/B with a stable outlook. In a statement after the announcement the agency said that its current outlook on the country reflected their opinion that, accelerating economic growth should offset risks from Ghana’s soft fiscal and external positions which were at an already weak rating level.

Inflation rises in Tanzania
Rising food prices were the main driver behind an increase in Tanzania’s inflation rate last month according to the country’s statistical bureau. Headline inflation expanded by 6.40% y/y in March against 5.50% in February.

Oman & Kuwait plan US$7 Bio refinery
Kuwait Petroleum International and the Oman Oil Company have both agreed to begin arranging financing for the construction of a US$7 bio refinery complex in the Omani port of Duqm, which once complete will be able to process up to 230,000 bpd. Each side will have a 50% stake in this joint venture.


Did you know that Fez, Morocco’s third largest city, is home to the world’s oldest existing and continually operating university? The University of Al-Karaouine has been teaching Islamic students since 859 AD.

Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127

To the fullest extent allowed by applicable laws and regulations, National Bank of Abu Dhabi PJSC (the “Bank”) and any other affiliate or subsidiary of the Bank, expressly disclaim all warranties and representations in respect of this communication. The content is confidential and is provided for your information purposes only on an “as is” and “as available” basis and no liability is accepted for or representation is made by the Bank in respect of the quality, completeness or accuracy of the information and the Bank has undertaken no independent verification in relation thereto nor is it under any duty to do so whether prepared in part or in full by the Bank or any third party. Furthermore, the Bank shall be under no obligation to provide you with any change or update in relation to said content. It is not intended for distribution to private investors or private clients and is not intended to be relied upon as advice; whether financial, legal, tax or otherwise. To the extent that you deem necessary to obtain such advice, you should consult with your independent advisors. Any content has been prepared by personnel of the Global Markets division at the Bank and does not reflect the views of the Bank as a whole or other personnel of the Bank.