US chamber inks major deal to spur KSA trade

Updated 20 May 2014
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US chamber inks major deal to spur KSA trade

The Council of Saudi Chambers (CSC) signed a memorandum of understanding (MoU) with the US Chamber of Commerce on Thursday to enhance trade cooperation between the two sides and promote investment in both countries for mutual benefits.
The MoU was signed by CSC Vice Chairman Fahad Al-Rabiah and Executive Vice Chairman of the US Chamber of Commerce David Chavern in the presence of Saudi trade attaché in Boston Abdel Al- Mubarak and a group of businessmen from both sides.
The agreement was signed by the CSC on behalf of the Saudi business sector representing the various chambers of commerce and industry of the Kingdom. The US chamber represents the largest organization which represents over 3 million American companies.
Stressing the importance of this agreement in strengthening relations between Saudi Arabia and the United Sates, Al-Rabiah noted that the deal reflects mutual trust in both countries' economies.
He added that Saudi-American relations have witnessed a big leap over the past decades, growing from $160 million in 1970 to more than $76.5 billion in 2012, with the investment credit of American countries in the Kingdom increasing to more than $23 billion.
Chavern described the CSC as a vital partner to enhance cooperation between both countries' business sectors, noting the US chamber's role in encouraging the companies to invest abroad as well as inviting foreign investments into the country.
He revealed that the chamber's current membership exceeds 300,000, allowing access to over 3 million American companies.
The MoU included several key issues of concern to the trade sector, such as exchanging information, exploring opportunities, transferring technology and facilitating business deals and arbitration matters between the two countries.
During the past 10 years, the bilateral trade between the two countries have increased from $26 billion to $74 billion. Some 120 US companies entered the Saudi market in 2013.
Last year, the two-way trade reached $71 billion. And for the first time monthly exports from the United States to the Kingdom topped $2 billion in December. There is a growing demand for American cars, aircraft, machines, renewable energy technologies and large-scale infrastructure in the Kingdom .
Saudi Arabia is the ninth largest trading partner to the United States with $74 billion trade in 2012 and has exhibited a 31 percent increase in the number of exports from the United States to the Kingdom in the period from 2011 to 2012.
The FY-2013 budget projected a spending level of $221 billion, the largest in the Kingdom's history and the financial liquidity generated from oil and gas reserves have resulted in $960 billion worth of projects either planned or under way in the Kingdom.
A significant $700 billion worth of these projects are reserved for mega-projects, making construction, project management, architectural engineering and design, and renewable energy sectors prime opportunities for US companies to consider increasing their investment.


Gulf of Oman tanker attacks jolt oil-import dependent Asia

Updated 15 June 2019
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Gulf of Oman tanker attacks jolt oil-import dependent Asia

  • Iranian threats to close the Strait of Hormuz have alarmed Japan, China and South Korea
  • Japan’s conservative prime minister, Shinzo Abe, was in Tehran when the attack happened

SEOUL: The blasts detonated far from the bustling megacities of Asia, but the attack this week on two tankers in the strategic Strait of Hormuz hits at the heart of the region’s oil import-dependent economies.

While the violence only directly jolted two countries in the region — one of the targeted ships was operated by a Tokyo-based company, a nearby South Korean-operated vessel helped rescue sailors — it will unnerve major economies throughout Asia.

Officials, analysts and media commentators on Friday hammered home the importance of the Strait of Hormuz for Asia, calling it a crucial lifeline, and there was deep interest in more details about the still-sketchy attack and what the US and Iran would do in the aftermath.

In the end, whether Asia shrugs it off, as some analysts predict, or its economies shudder as a result, the attack highlights the widespread worries over an extreme reliance on a single strip of water for the oil that fuels much of the region’s shared progress.

Here is a look at how Asia is handling rising tensions in a faraway but economically crucial area, compiled by AP reporters from around the world:

WHY ASIA WORRIES

The oil, of course.

Japan, South Korea and China don’t have enough of it; the Middle East does, and much of it flows through the narrow Strait of Hormuz, which is the passage between the Arabian Gulf and the Gulf of Oman.

This could make Asia vulnerable to supply disruptions from US-Iran tensions or violence in the strait.

The attack comes months after Iran threatened to shut down the Strait of Hormuz to retaliate against US economic sanctions, which tightened in April when  the Trump administration decided to end sanctions exemptions for the five biggest importers of Iranian oil, which included China and US allies South Korea and Japan.

Japan is the world’s fourth-largest consumer of oil — after the US, China and India — and relies on the Middle East for 80 per cent of its crude oil supply. The 2011 Fukushima nuclear disaster led to a dramatic reduction in Japanese nuclear power generation and increased imports of natural gas, crude oil, fuel oil and coal.

In an effort to comply with Washington, Japan says it no longer imports oil from Iran. Officials also say Japanese oil companies are abiding by the embargo because they don’t want to be sanctioned. But Japan still gets oil from other Middle East nations using the Strait of Hormuz for transport.

South Korea, the world’s fifth largest importer of crude oil, also depends on the Middle East for the vast majority of its supplies.

Last month, South Korea halted its Iranian oil imports as its waivers from US sanctions on Teheran expired, and it has reportedly tried to increase oil imports from other countries.

China, the world’s largest importer of Iranian oil, “understands its growth model is vulnerable to a lack of energy sovereignty,” according to market analyst Kyle Rodda of IG, an online trading provider, and has been working over the last several years to diversify its suppliers. That includes looking to Southeast Asia and, increasingly, some oil-producing nations in Africa.

THE GEOGRAPHY AND THE POLITICS

Asia and the Middle East are linked by a flow of oil, much of it coming by sea and dependent on the Strait of Hormuz.

Iran threatened to close the strait in April. It also appears poised to break a 2015 nuclear deal with world powers, an accord that US President Donald Trump withdrew from last year. Under the deal saw Tehran agree to limit its enrichment of uranium in exchange for the lifting of crippling sanctions.

For both Japan and South Korea, there is extreme political unease to go along with the economic worries stirred by the violence in the strait.

Both nations want to nurture their relationship with Washington, a major trading partner and military protector. But they also need to keep their economies humming, which requires an easing of tension between Washington and Tehran.

Japan’s conservative prime minister, Shinzo Abe, was in Tehran, looking to do just that when the attack happened.

His limitations in settling the simmering animosity, however, were highlighted by both the timing of the attack and a comment by Iranian Supreme Leader Ayatollah Ali Khamenei, who told Abe that he had nothing to say to Trump.

In Japan, the world’s third largest economy, the tanker attack was front-page news.

The Nikkei newspaper, Japan’s major business daily, said that if mines are planted in the Strait of Hormuz, “oil trade will be paralyzed.” The Tokyo Shimbun newspaper called the Strait of Hormuz Japan’s “lifeline.”

Although the Japanese economy and industry minister has said there will be no immediate effect on stable energy supplies, the Tokyo Shimbun noted “a possibility that Japanese people’s lives will be affected.”

South Korea, worried about Middle East instability, has worked to diversify its crude sources since the energy crises of the 1970s and 1980s.

THE FUTURE

Analysts said it’s highly unlikely that Iran would follow through on its threat to close the strait. That’s because a closure could also disrupt Iran’s exports to China, which has been working with Russia to build pipelines and other infrastructure that would transport oil and gas into China.

For Japan, the attack in the Strait of Hormuz does not represent an imminent threat to Tokyo’s oil supply, said Paul Sheldon, chief geopolitical adviser at S&P Global Platts Analytics.

“Our sense is that it’s not a crisis yet,” he said of the tensions.

Seoul, meanwhile, will likely be able to withstand a modest jump in oil prices unless there’s a full-blown military confrontation, Seo Sang-young, an analyst from Seoul-based Kiwoom Securities, said.

“The rise in crude prices could hurt areas like the airlines, chemicals and shipping, but it could also actually benefit some businesses, such as energy companies (including refineries) that produce and export fuel products like gasoline,” said Seo, pointing to the diversity of South Korea’s industrial lineup. South Korea’s shipbuilding industry could also benefit as the rise in oil prices could further boost the growing demand for liquefied natural gas, or LNG, which means more orders for giant tankers that transport such gas.