Saudi Arabia

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.

Qatar’s debt bonanza stores up problems for future

27 May 2016

Too much of a good thing could be bad for the Gulf state. It has just raised a whopping $9 billion in the bond market thanks to investors’ hunger for yield. Loading up on debt will help Qatar cope with lower energy prices, but just dodges its biggest problem: lavish spending.

Oil sustainably above $50 requires OPEC action

26 May 2016

Prices sneaked above a psychologically important marker. But given temporary geopolitical and climate drivers explain why, oil bulls can’t declare victory yet. Only a major reduction in global oversupply - the preserve of OPEC - can send oil markets much higher.

Saudi’s three great pillars are showing cracks

24 May 2016

Oil, Islam and the ruling family of Al Saud bind the kingdom together. But low commodity prices and disruptive economic reforms risk opening up divisions within the ruling class. That in turn could unpick the all-important 80-year pact between religious leaders and the state.

Saudi downgrade ought to galvanise reform

16 May 2016

A cut to its credit rating by Moody’s confirms the kingdom has taken the hard path: reform and low oil prices, with a goal of being diversified away from crude by 2030. A stronger balance sheet requires pricier oil or more reform impetus. The latter is the only real option.

Saudi reshuffle points to era of oil volatility

9 May 2016

Ali al-Naimi, just fired as oil minister, was the architect of a bitter price war but also had successes reaching consensus with OPEC. His successor Khalid al-Falih may lack the same influence. It suggests a more centralised Saudi establishment, but more discord in oil markets.

Saudi reforms could be low oil price’s cure

26 Apr 2016

Cheap oil helped Saudi Arabia’s deputy crown prince get backing for a plan to end his country’s addiction to crude. With that strategy to diversify the economy now rubber-stamped, higher prices are no longer a barrier to reform. Saudi could, maybe, have the best of both worlds.

Saudi Arabia’s post-oil reform vision looks blurry

25 Apr 2016

Riyadh’s new plan to reform the economy, Vision 2030, entails creating a giant SWF and listing a stake in state oil firm Aramco. It will raise cash, but won’t solve the kingdom’s crude problem. To truly advance as an economy, Saudi needs greater economic and social openness.