Saudi Arabia

Saudi U.S. selloff threat not to be trifled with

20 Apr 2016

The kingdom has told lawmakers it would dump some $750 bln of assets should Congress pass a bill allowing 9/11 victims to sue. These funds are its last line of defense to lower oil prices. That the alternative - having assets frozen - is an even worse outcome is scarier still. 

Give OPEC more power and let Iran and Saudi bicker

19 Apr 2016

A bitter struggle between Riyadh and Tehran has hit the credibility of the group, after their rift stymied a freeze to oil output. The dispute implies the cartel needs reform and more power to offset the political motives of its members. The outcome: a more stable oil market.

OPEC freeze failure could hasten oil’s recovery

18 Apr 2016

Producers failed to agree a deal to freeze supply at a meeting in Doha. The failure was largely due to Saudi Arabia’s refusal to allow Iran to be exempted from an agreement. Prices will drop initially, but if OPEC disintegrates the stalemate could hasten crude’s recovery.

Saudi gives a clue to oil price rebound

1 Apr 2016

Aramco, the kingdom’s crude producer, could go public as early as 2017, the deputy crown prince says. That may hint at when he expects energy markets to recover. While investors might pile into Aramco anyway, higher oil prices would ensure the best price for Saudi Arabia’s jewel.

Saudi-Russia oil deal is full of holes

16 Feb 2016

The crude producers have agreed to freeze production at January levels. But both Russia and the OPEC kingpin are already pumping nearly flat out. And Iran, which wants to raise output after years of sanctions, may not agree. At best, it may lead to a more ambitious deal later.

Oil slump seriously harms Saudi Arabia’s health

1 Feb 2016

Big cuts to healthcare spending show the many ways in which low prices are putting strain on the Kingdom’s economy. Treating Saudi’s population of diabetics would absorb 15 percent of oil export revenue at $20 a barrel. Private investors will be needed to fill the gap.

Russia and OPEC only need to give an inch on oil

28 Jan 2016

Russia has given its biggest signal yet that a grand bargain with Saudi, Iran and the rest of OPEC to reduce oil output is possible. All sides want to avoid the economic catastrophe of $20 crude but none wants to sacrifice market share. A modest cut may be all that is required.

Cox: Argentina, Aramco are deals for tricky times

26 Jan 2016

Two big transactions dominated Davos. One would open up a democracy to capital markets after years of feckless governance and isolation. The other is designed to help a repressive regime retain power. In the world’s current parlous state, it’s to be hoped that both get done.

Saudi oil kingpin could fall with oil price

21 Jan 2016

Ali al-Naimi staked his credibility on a high-risk strategy to knock out the kingdom’s rivals. A harsh tumble in crude below $30 a barrel, however, is now too painful for OPEC members, including Saudi, to bear. It puts the octogenarian minister’s job, and oil policy, at risk.

Arab winter has become markets’ chief worry

15 Jan 2016

Trouble brewing in the Middle East is fast turning into financial markets’ biggest anxiety. Sectarian divisions, the rise of radical Islam and plummeting oil prices are threatening to rip the region apart. International markets suffer too as Arab money is spirited back home.

Oil rout emboldens Saudi Arabia’s reforming prince

14 Jan 2016

The kingdom’s Deputy Crown Prince Mohammed bin Salman is being emboldened by the collapse in oil prices. The son of Saudi’s ageing king has emerged as the driving force behind economic reforms aimed at transforming the state. But for investors, his growing power carries risks.

Saudi Aramco IPO could herald a Riyadh garage sale

12 Jan 2016

The IPO of a strategic stake in Saudi Aramco could be the start of a kingdom-wide selloff of state assets. The government owns stakes in locally listed firms worth $170 billion. By spinning these off to compensate for lower oil revenue, it could fund years of budget deficits.

Saudi Aramco IPO carries big investor risks

8 Jan 2016

Saudi Arabia has whetted the appetite of potential shareholders with the prospect of listing shares in its state oil company. A sale would give investors access to 18 pct of the world’s oil reserves but little say in how the company is run. The risks could outweigh the rewards.

Epic IPO suggests Saudis feel heat of fading oil

7 Jan 2016

The kingdom may sell a stake in state-owned Aramco, the world’s largest crude producer – by far. The firm’s value could be in the trillions of dollars, dwarfing the likes of Exxon. With oil prices falling and other energy sources on the rise, there’s growing pressure to cash in.

Saudi-Iran standoff magnifies upside risk for oil

4 Jan 2016

The kingdom has cut off diplomatic relations with Iran, suggesting it will continue a strategy of pursuing low oil prices to cripple the weak Iranian economy. An escalation, though, could threaten the one-fifth of world oil supplies that travels through the Strait of Hormuz.

Saudi has chance to teach hedge funds a lesson

3 Dec 2015

The largest OPEC producer has long complained that the biggest risk to a stable oil market is hedge funds who bet on falling prices. A deal to cut production in Vienna on Dec. 4, while a drop in the bucket for Saudi, could push up oil prices and leave speculators with big losses.

Dollar peg remains Saudi Arabia’s best option

27 Nov 2015

Saudi Arabia is under pressure to break its currency peg with the dollar. The inflexible riyal means Saudi can’t devalue to offset weak oil prices. But given Riyadh’s huge forex reserves, the risks of moving to a floating currency still outweigh the rewards.

Oil market rests on Saudi-Iranian output deal

24 Nov 2015

Saudi Arabia says it will work with the world’s biggest oil producers to maintain price stability. To be effective, the OPEC kingpin will also have to make room for Iran to add barrels to the flooded market. The geopolitics are fast moving. But logic points to a deal.

Saudi banks can help to plug oily black hole

2 Nov 2015

A ratings downgrade for Saudi Arabia reflects the impact of falling oil prices, but the kingdom has economic levers it can still pull. Lenders are highly liquid, with room to fund a widening budget deficit. And if push comes to shove, Saudi can even sell bank stakes to outsiders.

Energy subsidies will test Saudi’s pain threshold

29 Oct 2015

The kingdom is considering how to claw back the $107 bln it foregoes each year by subsidising the price of domestic energy. Without that support, companies would be uncompetitive and subjects angry. But the impact of low oil prices makes giveaways an unaffordable luxury.