Saudi Arabia’s tech bet is bold but necessary 14 Oct 2016 The kingdom's plan for a $100 bln tech fund with Japan's SoftBank is a risk worth taking. Saudi's biggest listed investments have created middling returns, and it needs to replace oil as its major engine. Prince Mohammed bin Salman seems to be applying some millennial thinking.
SoftBank and Saudi pump fresh air into tech bubble 14 Oct 2016 Masayoshi Son's group and Saudi Arabia are plotting a $100 bln tech fund. That incredible sum could finance some huge LBOs, or inflate startup valuations again just as other investors start to fatigue. Even if Son casts his net very wide, it will be hard to stay disciplined.
Saudi can’t have cheap oil and a war in Yemen 12 Oct 2016 The kingdom's fight against Houthi militants in Yemen is a burden on finances strained by cheap crude. Persisting with its expensive military adventure may require Riyadh to let oil prices rise further. Otherwise real-world battles may spill over into the economic kind.
Output deal buys OPEC time but not deliverance 28 Sep 2016 The oil cartel surprisingly agreed to cap production but has deferred agreement on which members will reduce the flow of crude. Limiting daily output to 32.5 mln barrels should support global prices for now. A lasting plan to balance supply and demand, though, may remain elusive.
Iran’s upper hand in OPEC could be fleeting 28 Sep 2016 The Islamic Republic's resistance to an oil deal leaves its rival Saudi Arabia stuck with low prices. Yet that is pushing Riyadh to launch necessary economic reforms, which should make the kingdom more competitive. Iran, despite its current rapid growth, risks falling behind.
Saudi faces choice of austerity over indulgence 7 Sep 2016 Falling oil prices may lead Riyadh to cut up to $20 bln of infrastructure projects. The risk is it might trigger a construction slump. Of course, Saudi could just increase borrowing and continue building in the desert. Restraint is perilous but would make more financial sense.
Saudi-Russian oil truce more mirage than reality 5 Sep 2016 Riyadh and the Kremlin make awkward allies. Competing economic and political interests in the Middle East have been hard for both sides to overcome, even for the mutually beneficial goal of higher oil prices. Their latest attempts at a crude truce will probably be only illusory.
Libya is the fly in OPEC’s ointment 31 Aug 2016 Whether the cartel can push up oil prices depends on Tripoli. Libya’s production is small but unpredictable. Include the war-torn country in any output cap, and other OPEC members may end up forced to produce less. Ignore it, and efforts to rein in production could be wasted.
Saudi building bust may demolish prince’s reforms 17 Aug 2016 Low oil prices have left thousands of foreign construction workers stranded without pay, and some building companies in financial trouble. Saudi is trying to diversify away from oil, make economic reforms and avoid disrupting the social order. It’s not easy to do all three.
Kuwait oil selloff success depends on reserves 12 Jul 2016 A plan to follow Saudi Arabia by partially privatising its state-run oil industry could make sense for OPEC's fifth-largest producer. An IPO would generate needed billions for the government. Maximising proceeds, though, will mean ceding control of the crude still in the ground.
It’s not how much oil, but how much influence 5 Jul 2016 The U.S. has more oil than Saudi Arabia, according to Rystad Energy. But oil reserves are only worth counting if there’s a chance they can be produced economically over time. Size is much less important than an ability to guide the price - and there, Saudi still rules.
Saudi Arabia opens door to OPEC fightback 22 Jun 2016 The kingdom’s new energy minister just implied it may resume its role as the world’s swing producer. Oil prices have suffered since it stepped back in 2014. If Saudi wishes it - and OPEC’s recalcitrant members play ball - a production cut will be back on the cards.
Bahrain tips Middle East’s delicate balance 21 Jun 2016 Stripping citizenship from the spiritual leader of its majority Muslim Shi’ite population will inflame ethnic tensions in the tiny archipelago that’s home to the U.S. Fifth Fleet. The real story is the tension between its neighbours, Iran and Saudi. Bahrain has become a troubling proxy.
Saudi pitches to U.S. in diminished circumstances 13 Jun 2016 Cheap oil, the opening up of Iran and shootings in Orlando could all make Deputy Crown Prince Mohammed bin Salman’s visit to the United States unusually tense. Saudi needs security guarantees and oil demand as it tries to modernise its economy. That puts it on the back foot.
Singapore, Saudi put corporate do-gooders on spot 9 Jun 2016 Banks covet business in Saudi Arabia despite its poor human rights. They can say it’s the direction of travel that counts. Singapore, which just told groups like Goldman Sachs to stop backing a gay and lesbian event, is going backwards. It puts corporate sincerity to the test.
Saudi reform plan dodges most taxing question 7 Jun 2016 Income tax is perhaps the missing link in the kingdom’s latest plan to modernise the economy. Saudis currently keep all their earnings. That isn’t compatible with a record budget deficit. Taxing wages is a taboo, but it’s also the best way to diversify away from oil dependence.
OPEC silence beats hollow pledges 2 Jun 2016 Oil producers’ failure to agree on a policy to curb supply is not all bad. A deal would have boosted prices in the short term but been hard to enforce given Saudi-Iran tensions. The already-weak cartel can ill afford the reputational damage of promising more than it can deliver.
OPEC has an oily blind spot over Brexit 2 Jun 2016 Britain leaving the EU would present the cartel with a tricky demand problem. Brexit could slow economic growth in Europe and reduce consumption of crude in the world’s third-largest market for fuel. If that happens OPEC may have to cut output, or risk prices falling again.
Uber receives ultimate disruptor stamp of approval 1 Jun 2016 The taxi-hailing app has snared a $3.5 bln investment from Saudi Arabia’s Public Investment Fund. It’s not just a hedge against the kingdom’s oil dependency. It also confirms Uber as one of the probable central players in the shift to electric, autonomous vehicles.
OPEC’s second coming can only start at the top 31 May 2016 Oil prices could get a boost if bickering members of the cartel can put aside their differences and select a new secretary general. Nigerian Mohammed Barkindo looks like the candidate most capable of getting OPEC functioning, and restoring its image among non-members like Russia.