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Middle East & African Monitor – 20 June 2017

  • Saudi Arabia Says It Has Captured Three Iranian Revolutionary Guards.
  • Supply Concerns Keep Oil Prices Under Pressure.
  • Qatar Will Remain “Isolated” Unless It Addresses Concerns – UAE Minister.
  • Nigeria’s FX Windows Keep NGN Steady But Investors Wary.
  • FITCH Affirms Oman Ratings But Amends Outlook.
  • ALAFCO Orders 20 Boeing Passenger Jets.
  • France’s Engie Buys Tabreed Stake.
  • Al Raha Group Wins F-15 Contract.
  • Uganda Cuts Lending Rate.

REGIONAL COMMENTARY

Saudi Arabia Says It Has Captured Three Iranian Revolutionary Guards.
Saudi Arabia’s Ministry of Culture and Information released a statement late yesterday saying that the Kingdom’s security forces had captured three Iranians, who had reportedly been transporting explosives aboard a small boat and sailing towards an oil platform. “An official source stated that the Saudi Royal Navy arrested three members of the Iranian Revolutionary Guards who were on board a boat loaded with explosives heading toward an oil platform in the field of Marjan in the Arabian Gulf,” the statement read. This story was also described in more detail by the Saudi Press Agency as follows; “At 20:28 on Friday, June 21, three small boats, bearing red and white flags, entered Saudi territorial waters in the Arabian Gulf. They headed rapidly toward platforms in the Saudi oil field of Marjan, immediately, the Saudi naval forces fired warning shots, but the boats did not respond. Consequently, one of the boats was captured and it was loaded with weapons for subversive purposes, but the other two boats escaped. The Kingdom of Saudi Arabia stresses its determination to combat and eradicate terrorism and its sources, as a part of the country’s permanent objective to protect its national security against any external aggression.”

Supply Concerns Keep Oil Prices Under Pressure.
WTI ended the US session yesterday at its lowest level since last November as stale speculative longs continued to liquidate their positions, and on the back of rising US shale rig counts and media headlines suggesting Nigerian and Libyan exports could increase sharply soon. However it’s worth noting that a number of US shale analysts are indicating that overall rig expansion appears to be leveling off, especially in the important Permian basin, where by the way land and service related costs are rising steadily, pressing drillers break-even numbers up again despite improved technology. This potential peak in rig growth was highlighted in a recent Baker Hughes report which showed that an average of six oil rigs were added each week last month, down from more than 13 in March. Meanwhile looking further out the EIA says that the proven liquid oil reserves for 68 publicly traded global producers which trade on US stock exchanges fell in 2016 for the second year in a row. ExxonMobil alone cut its proved reserves of crude oil by 3.3 billion barrels in the largest annual reserve cut in the firm’s history.

Qatar Will Remain “Isolated” Unless It Addresses Concerns – UAE Minister.

The UAE Minister of State for Foreign Affairs, Dr Anwar Gargash, has warned that Doha could remain isolated for an extended period if it did not address the concerns raised by Saudi Arabia and the UAE. "The Kuwaiti mediation will be very useful and there will be demands coming. Qatar will realise that this is a new state of affairs and isolation can last years, If they want to be isolated because of their perverted view of what their political role is, then let them be isolated," the ‘National’ newspaper quoted Gargash as saying. Meanwhile Qatar’s Foreign Minister, Sheikh Mohammed bin Abdulrahman, reportedly stated yesterday that his government would only enter negotiations if the recently imposed economic pressures were lifted first.

Nigeria’s FX Windows Keep NGN Steady But Investors Wary.
The unofficial USD/NGN rate edged below 370.00 recently as the Central Bank’s policy of weekly FX injections, via its official currency windows, appears to have helped temper demand for US dollars in the ‘kerb’ market. However as we have stressed before this policy will not entice sizeable inflows from offshore investors, nor will it end the overall hard currency shortage. While revenue receipts from a rebound in domestic oil production has helped the Central Bank’s reserves rise by 15.27% y/y, this rise appears to be stalling, highlighted by a drop to US$30.36 bio at the end of May against US$30.9 bio in April. The head of Nigeria’s FMDQ OTC securities exchange indicated last week that the authorities are looking at ways to unify its varied exchange rate system, although it’s not clear yet how and when such a move will be initiated. Maybe it’s time Nigeria has a look at the Egyptian example in regards to its FX regime, especially when you consider the fact that Egypt’s reserves have now overtaken Nigeria for the first time since 2011, buoyed by strong offshore related inflows since it devalued and floated its own currency. For those who have not yet seen our latest brief on Egypt you can access it here : https://www.nbad.com/en-ns/insight-and-features/mena-and-global-markets/big-stories/2017/egypt-quiet-progress.html

FITCH Affirms Oman Ratings But Amends Outlook.
Fitch yesterday affirmed its BBB ratings on Oman but has revised its outlook on the country to negative from stable.

ALAFCO Orders 20 Boeing Passenger Jets.
Kuwait’s Alafco Aviation Lease & Finance company has reportedly confirmed an order for twenty Boeing 737 Max 8’s in a contract worth US$2.2 bio.

France’s Engie Buys Tabreed Stake.
The UAE based Mubadala Investment Company has agreed to sell its 40% stake in Tabreed to France’s Energie for AED 2.85 bio.

Al Raha Group Wins F-15 Contract.
Saudi Arabia’s Al Raha Group has been awarded a US$185 mio contract to provide technical support services to the Kingdom’s fleet of F-15 fighter jets.

Uganda Cuts Lending Rate.
Uganda’s Central bank lowered its benchmark lending rate by 100bp yesterday to 10.00%. The bank’s governor said the decision was prompted by a fall in inflationary pressures and the dip in GDP growth, itself partially caused by a severe recent region-wide drought.

20-06-2017

AND FINALLY…
Dubai's Roads and Transport Authority is set to trial a fleet of air taxis by the end of 2017, with a view to make them commonplace in years to come. The RTA says the aircraft will have a luxury interior and cruise at 50km/h, with a maximum speed of 100km/h.

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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