Saudi Arabia

OPEC’s oil price conundrum requires new bargain

9 May 2017

The cartel’s decision to restrict output has failed to revive prices. Extending the current deal – as Saudi Arabia’s oil minister has hinted – is not guaranteed to drain stockpiles. Making deeper cuts at the expense of market share would do the trick, but could be hard to agree.

London could trip on Aramco’s IPO red carpet

4 May 2017

The city’s stock exchange is considering a new kind of governance-lite listing to attract the Saudi oil producer. Innovation is okay, if new rules are clear and existing ones aren’t watered down. Too naked a desire to please the powerful, though, would hurt London’s reputation.

Saudi austerity U-turn highlights reform hurdles

24 Apr 2017

The kingdom has restored perks for public sector workers in an attempt to preserve its broader economic agenda. Though the unpopular measures helped cut the deficit the social costs outweighed the benefits. Riyadh is learning that austerity and reform rarely work in tandem.

China’s Aramco pitch puts pressure on Tokyo’s bid

20 Apr 2017

A Chinese consortium is angling for a cornerstone role in Saudi Aramco's IPO, Reuters says. This bolsters the case for a Hong Kong listing. Riyadh will like the prospect of easy money with few strings attached. Japan, also competing for the deal, may need to step up.

Saudi will find luring May was the easy part

5 Apr 2017

The British prime minister’s charm offensive in Riyadh may help sell more planes and halal lamb. It also sends a message to EU negotiators. What Saudi really needs is investment, people and skills – which hinge on the so-called soft issues Theresa May seems happy to overlook.

Saudi finds cheap way to be generous to Aramco

28 Mar 2017

The kingdom has slashed its oil major’s tax rate to juice up a potential IPO. That could theoretically triple the company’s market value to well over $1 trillion. Yet because Saudi will keep a 95 pct stake, the state can recoup almost all of what it appears be giving away.

Dubai mall owner throws sand in Amazon’s face

27 Mar 2017

Emaar Malls has challenged the U.S. retailer with an $800 mln counterbid for Souq.com. Amazon has technical expertise and deep pockets. But the owner of Dubai’s largest retail park has local knowledge, powerful allies and, most importantly, an existing business model to defend.

Citi’s Saudi comeback hangs on friendly oil prices

23 Mar 2017

The American lender wants a new licence to do deals in a kingdom it mostly exited over a decade ago. Economic reforms and the sale of state assets like Aramco could be rich pickings. A big variable is oil. The lower its price, the more juicy mandates banks can expect.

Saudi Arabia’s flawed oil plan still the right one

15 Mar 2017

Cuts to production agreed with OPEC aren’t boosting the value of crude as hoped, or reducing global stockpiles. Shale in the U.S. is recovering too, and prices are moving sideways. The holding pattern is painful, but it’s still better than reversing course and letting oil plunge.

Aramco’s IPO merits social engineering discount

10 Mar 2017

The kingdom’s state oil group is about to launch the world’s biggest share offer. It has also just announced plans to invest $4.4 bln in a new industrial city, to create jobs for Saudis. The danger for potential investors is that white elephant subsidies trump a focus on returns.

SoftBank loses focus with $100 bln Vision fund

9 Mar 2017

The Japanese giant may inject an $8 bln stake in chip designer ARM into the tech fund, at the behest of the latter. Other recent buys will also be offered. That would help SoftBank pare debt. But the benefits of Vision are tainted by a related deal frenzy and murky relationship.

Aramco IPO has limited destination choices

8 Mar 2017

Every global exchange would love to host the Saudi oil titan's shares. A Breakingviews analysis weighing market, political and other forces suggests New York is most attractive and Tokyo a top wild-card. Aramco's sheer size and importance mean finance fundamentals come first.

Britain needn’t fear SoftBank’s pass-the-parcel

8 Mar 2017

The Japanese tech group may shift part of its stake in British chip designer ARM to a $100 bln fund forged with Saudi Arabia. If SoftBank and ARM's board retain control, commitments over UK jobs should be upheld. A more international shareholder base may extend ARM's clout.

Saudi Arabia’s Asian pivot looks defensive

3 Mar 2017

A rare royal visit to the region shows the oil-rich kingdom’s vulnerability. Declining U.S. demand and competition from Iran and Iraq make Eastern customers more important. Saudi can offer something rivals can’t - splashy investments and the IPO of its state oil producer, Aramco.

Aramco golden ticket has risks for Western banks

22 Feb 2017

JPMorgan and Morgan Stanley may have won the contest to be lead underwriters on the Saudi oil giant's $100 bln offering. The mandate could propel them to the top of the league tables, opening doors in the kingdom and elsewhere. But an IPO flop could be fatal for their franchises.

OPEC’s solidarity points to longer production cuts

14 Feb 2017

The cartel has taken two steps forward and one step back. Compliance with output cuts is narrowing the gap between supply and demand, but it is also encouraging U.S. producers to drill more wells. Sustained higher prices may require even more restraint to keep the market balanced.

Saudi’s Trump friendship more about money than oil

1 Feb 2017

Riyadh may boost its investments in American energy under the new president. An abundance of shale oil and a focus on domestic supply means Saudi Arabian crude is no longer enough to secure U.S. political support in the Middle East. Its cash is still attractive, though.

Bets against Iraq’s OPEC cuts are premature

10 Jan 2017

Traders may have jumped the gun betting Baghdad won’t stick to an output deal. The cartel's second-largest producer has little to gain reneging on the pact and could struggle to maintain record shipments without investment. Higher prices help its cause more than extra barrels.

Millennial princes snatch at power in Gulf

3 Jan 2017

Ageing monarchs may hand greater powers to a younger, more progressive generation in 2017. Falling oil revenues and ballooning budget deficits are forcing sheikhdoms to make overdue economic and social reforms or risk financial meltdown. Millennial thinking could help.

Best of Breakingviews 2016: Our readers’ top picks

30 Dec 2016

You demonstrated a varied, voracious appetite for insight in 2016. The most-clicked columns, podcasts and graphics encompassed the rise of Trump and Brexit Britain to Singapore, Saudi Arabia, negative rates, tech titans and an ethical dilemma for Harvard's business school dean.