NBAD Middle East & African Monitor – 16 May 2017
Oil prices rebound on output cut extension prospects & rumours of further measures
Oil Prices rebounded yesterday following a joint statement by the Russian and Saudi Energy Ministers which suggested an extension of the OPEC/NOPEC production cut agreement could lead beyond just another six months, and instead into the first quarter of next year. This proposal received the support of Kuwait’s Oil Minister this morning, but there are also rumours doing the rounds that the Kingdom may be preparing to announce further separate measures, following a scheduled OPEC meeting later this month, in an ongoing effort to speed up a supply/demand equilibrium. One possibility in this regard could be the inclusion of a cut in the production of petroleum products and natural gas liquids. Meanwhile a Reuters report published on Sunday quotes an unnamed OPEC source claiming that global crude inventories held in floating storage had declined by one-third since the beginning of this year.
Trump looks to press reset button on US-Saudi relations
Saudi Arabia will be the initial destination during President Trump’s first overseas trip since he took office, and this underlines his administration’s desire to improve US/Saudi relations which had declined somewhat during Barrack Obama’s tenure. Combatting terrorism and confronting Iran will be top of the agenda during Trump’s discussions in the Kingdom, where he and his entourage are also expected to meet with security officials from across the region including those from the GCC, Egypt and Turkey. The US National Security Advisor, H.R McMaster, said during an earlier briefing about the trip that the President wanted to “Encourage our Arab and Muslim partners to take bold, new steps to promote peace and to confront those, from ISIS to al-Qaeda to Iran to the Assad regime, who perpetuate chaos and violence that has inflicted so much suffering throughout the Muslim world and beyond.” Meanwhile a senior White House official has been quoted by Reuters as saying that the US and Saudi Arabia were close to sealing a number of new trade and investment deals worth up to US$300 bio over the next ten years. These deals apparently include a US$100 bio sale of heavy weapons and equipment, with the US official reportedly stating; "We'll see a very substantial commitment, in many ways it is intended to build capabilities for the threats they face. It's good for the American economy but it will also be good in terms of building a capability that is appropriate for the challenges of the region.” Trump heads to Riyadh on the 19th of May, followed by stopovers in Jerusalem, the Vatican, Brussels and Sicily.
Health of Nigerian President again in the spotlight
Rumours are again doing the rounds over the state of President Buhari’s health, with some suggesting he had been put on life-support in a London hospital after he returned there for treatment last week. A spokesperson for the President’s office has dismissed such talk saying; “Baseless rumors are trending again that an unpleasant thing has happened to our beloved President, Muhammadu Buhari. If you have received this information on WhatsApp or Facebook, disregard it because it is plain lies spread by vested interests to create panic, nothing unpleasant has happened to the President and there is no cause for apprehension, thanks for the many calls," Garba Shehu stated via his Twitter account. The government said last week that the length of Buhari’s return to London would be determined by his doctors, and that his deputy, Yemi Osinbajo, had again assumed the role of acting President during Buhari’s absence.
Hardline Presidential candidate in Iran receives election boost
Ebrahim Raisi, who is the main conservative candidate in Iran’s upcoming Presidential election, received a boost late yesterday after another hardline representative, Mohammad Baghar Ghalibaf, withdrew from the race and announced his support for Raisi. “What is important now and vital is preserving the interests of the people, the country and the revolution and this cannot be achieved in any way other than a change in the current situation. We should make a fundamental decision to create unity in the revolution’s front and I call upon all my supporters across the country to come out in support of my esteemed brother Hujjat al-Islam Ebrahim Raisi and make him succeed in forming the government of work and dignity,” Ghalibaf was quoted as saying by Iran’s state-run media following his withdrawal. Raisi is a cleric, and should he defeat the ‘reformist’ incumbent Hassan Rouhani (who remains the front-runner for now), such a victory could also improve his chances of eventually succeeding Ayatollah Khamenei as the country’s Supreme Leader.
Senegal completes bond roadshow
Senegal has completed a series of investor presentations ahead of a potential US$750 mio bond issuance which will reportedly have a final maturity of 15 years. According to IFR magazine the roadshow had attracted decent investor interest, and although we still await an initial price guidance there are early suggestions it will be in the region of 6.50 -7.50%. Senegal is currently rated at B+ by Standard & Poors. Meanwhile last week BP announced that it had made a “major” gas discovery off the coast of Senegal which it says confirms their belief that “offshore Senegal and Mauritania is a world-class hydrocarbon basin.”
Egypt’s unemployment rate dips – New tax on stock market transactions
Data released by Egypt’s statistical office suggests that the country’s unemployment rate dipped to 12.00% during the first quarter of this year, compared to 12.40% during the last quarter of 2016. Meanwhile Egypt’s House of Representatives has approved a government proposal to apply a tax duty on stock exchange transactions, this new law is expected to be implemented next month. According to the Deputy Finance Minister the duty has been set at EGP1.25 per 1,000 for the first year of the tax's introduction, increasing to EGP 1.50 in the second year and EGP1.75 in the third.
Minor rebound in SSA economic growth expected – IMF
Economic growth in sub-Saharan African is expected to increase slightly to 2.60% this year according to a recent IMF report. This recovery will be driven by the end of a serious drought which ravaged countries in the East and South of the region in particular, an improvement in oil production by Nigeria, higher public spending in Angola and continued expansion in Senegal, Kenya and the Ivory Coast.
CAMC Engineering wins Morocco contract
China’s Camc Engineering has been awarded a US$250 mio tyre manufacturing project in Morocco.
“Most people seek after what they do not possess and are enslaved by the very things they want to acquire.”- Quote By Egypt’s Anwar Sadat.
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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