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Middle East & African Monitor – 24 May 2017

  • “All Options Are On The Table” To Balance The Oil Market – Kuwaiti Minister.
  • Iran Warns That Its Missile Program Will “Never” Be Halted.
  • Qatar Says Its State News Agency Was Hacked.
  • Protests In Tunisia Affecting Domestic Oil & Gas Production.
  • Nigeria Keeps Rates Unchanged As Economy Shrinks Again.
  • Egyptian Yields Remain Attractive.
  • UAE Unveils New Taxes On Specific Products. 
  • Oman Tightens SUKUK Pricing.

REGIONAL COMMENTARY

“All Options Are On The Table” To Balance The Oil Market – Kuwaiti Minister.
Kuwait’s Oil Minister, Essam al Marzouq, said yesterday that OPEC was determined to work towards a full rebalancing of the crude oil market, and that all possible options to do so would be discussed at this week’s conference in Vienna. “All options are on the table and could be discussed, however, any agreement should be satisfactory for all parties, and if necessity arises, we could increase the output cut,” he stated, adding that most signatories to the output reduction agreement supported an extension of it, although there was still some debate over whether this extension should be for 6 or 9 months. "We have agreed on the six months, some countries have agreed to six months subject to a revision in November for an additional three months. From what I have heard, and in press releases, the Iraqi and Iranian ministers have declared that they prefer six months," al Marzouq said.

Iran Warns That Its Missile Program Will “Never” Be Halted.
A spokesperson for the Rouhani administration yesterday defended Iran’s right to develop its missile capabilities; "Some world powers are attempting to display Iran's defensive missile power as a concern for the neighbouring states. I should stress that creating concern about Iran's defence power will not lead to its confinement, stronger defence power will further protect the internal and regional security; therefore, it is natural that the country's defensive missile program is among the Islamic Republic's unchangeable policies and fortunately, strengthening the defence power has been clearly foreseen in the sixth development program and this year's budget," Mohammad Baqer Nobakht was quoted as saying by Iran’s state media. His comments follow those by the newly re-elected Iranian President who stated; “Our missiles are for our defence and for peace, they are not offensive. Know that while there is a technical need to conduct missile tests, we will do so and we will ask the permission of no one.” Meanwhile his US counterpart, Donald Trump, said during his visit to Jerusalem on Monday that; “Iran must never be allowed to possess a nuclear weapon, never ever, and must cease its deadly funding, training and equipping of terrorists and militias, and it must cease immediately.”

Qatar Says Its State News Agency Was Hacked.
The Qatari government has said that a local media report, claiming that the country’s ruler had criticized certain aspects of US foreign policy towards the region following President Trump’s recent visit to Saudi Arabia, was fake and that it had initiated an urgent investigation into the matter. "The Qatar News Agency website has been hacked by an unknown entity, and a false statement attributed to His Highness has been published. An ongoing investigation will be put in place to look into this matter. The statement published has no basis whatsoever, and the competent authorities in the State of Qatar will hold all those involved accountable,” a statement issued by the government’s communications office and published by Reuters read.

Protests In Tunisia Affecting Domestic Oil & Gas Production.
According to the energy industry website, ‘upstreamonline’ a number of oil and gas pumping stations in the south of Tunisia have temporarily suspended their operations due to ongoing protests in the area. Reuters reports that unrest in the Tatatouine province had recently become violent and that two police stations were burnt down on Monday after a police vehicle allegedly knocked down and killed a protestor. Tunisia currently produces around 44,000 barrels of oil per day.

Nigeria Keeps Rates Unchanged As Economy Shrinks Again.
The Nigerian Central Bank kept its benchmark interest rate unchanged at 14% following yesterday’s MPC meeting as expected. However latest data released by the country’s national statistics office showed that the economy was still in recession, shrinking by 0.52% during the 1st quarter of this year, and following on from an overall 1.50% decline in 2016. On the bright side oil production edged up to 1.83 mio bpd this year as militant activity in the Niger Delta region remained subdued.

Egyptian Yields Remain Attractive.
USD/EGP has remained within a tight 18.00-18.10 range for almost two months now, whilst sizeable foreign inflows into Egyptian equities and T-bills has helped the Central Bank increase its reserve levels to US$ 28.60 bio a six-year high, and these should be boosted further by the IMF’s release of its second US$1.25 bio loan tranche to the country, and by an upcoming Eurobond issue worth US$1.5-2 bio. Inflation however remains high and has been driven primarily by the float and consequent devaluation of the local currency towards the end of last year. This week the CB hiked its main interest rates by a chunky 200bps, and while it was officially explained as an attempt to blunt inflationary pressures,( an issue which the IMF is also concerned about), we think it may also be a temporary move to attract further foreign inflows. The yields on T-bills and T-bonds have risen since the rate hike, and this adds to the attractiveness of long EGP positions. Thus unless there is a major risk-off selloff in global EM FX and equity markets in the near future then it is likely USD/EGP will begin to shift below 18.00 again and head towards the 16.00 area.

UAE Unveils New Taxes On Specific Products.
The UAE’s Federal Tax Authority has announced a series of new taxes on certain types of products including; a 100% tax on tobacco products and a 50% tax on fizzy beverages. These new taxes are reportedly due to come into effect from Q4 this year.

Oman Tightens SUKUK Pricing.
There has been strong demand for Oman’s debt public Sukuk issuance with a consequent tightening of the initial price guidance of 270bp over mid-swaps to 235bp. Orders for the US$2 bio issue reportedly totaled almost US$7 bio.

24-05-2017

AND FINALLY…
Did you know that Lebanon is the only country in the Middle East that has no desert? 

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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