Saudi contract awards surge to highest in four years

Saudi Aramco continued awarding projects to international contractors at its Marjan oil field. (Getty Images)
Updated 11 September 2019

Saudi contract awards surge to highest in four years

  • The contract tally reached SR64.3 billion during the second quarter — up 32 percent on the previous quarter and an increase of 92 percent on a year earlier
  • The oil and gas sector overwhelmingly dominated the contracts awarded in the second quarter, accounting for almost three-quarters of the total

LONDON: The value of contracts awarded in Saudi Arabia almost doubled in the second quarter compared to a year earlier, led by the energy, property and military sectors, according to a report published on Tuesday.
The contract tally reached SR64.3 billion ($17.2 billion) during the period — up 32 percent on the previous quarter and an increase of 92 percent on a year earlier, the US-Saudi Arabian Business Council (USABC) said in its report.
It represents the highest value of contracts awarded by quarter in four years with more awards made in the first half of this year than the whole of 2018.
“This highlights the resurgence in 2019, which is on pace to match the construction boom witnessed prior to the brief economic downturn,” USABC said.
The collapse of oil prices in 2014 led to billions of dollars worth of projects being placed on hold throughout the Gulf, but business activity in Saudi Arabia, the region’s largest economy has started to accelerate.
While a majority of the contracts were awarded by the government, the private sector was an active participant in the real estate sector in particular, USABC noted.
The oil and gas sector overwhelmingly dominated the contracts awarded in the period, accounting for almost three-quarters of the total.
Saudi Aramco continued awarding projects to international contractors at its Marjan oil field as well as the Tanajib oil complex in the Eastern Province, the council said.
For the second consecutive quarter, the Eastern Province contributed the largest share of awarded contracts by region.
The order pipeline for the rest of the year also looks set to continue the strong momentum, led by Aramco’s Marjan and Berri field projects as well as the first phase of the Red Sea Tourism Project.


Oil surges, stock futures slip after attack on Saudi facility

Updated 33 min 37 sec ago

Oil surges, stock futures slip after attack on Saudi facility

  • Oil prices surge on fears of global supply disruption
  • Safe haven gold, Japanese yen rise, stock futures slip

SYDNEY, Australia: Oil prices surged to six-month highs on Monday while Wall Street futures fell and safe-haven bets returned after weekend attacks on Saudi Arabia’s crude facilities knocked out more than 5% of global oil supply.
US crude futures were last up 11% at $61.10 a barrel, coming off highs on expectations other global oil suppliers would step in to lift output. Brent crude soared 13% at $68.06 after earlier rising to $71.95.
Yemen’s Iran-backed Houthi rebel group had claimed responsibility for the attack, which hit the world’s biggest oil-processing facility but a senior US official told reporters on Sunday that evidence indicated Tehran was behind it.
The attacks heightened investor worries about the geopolitical situation in the region and worsening relations between Iran and the United States.
Those fears powered safe-haven assets with prices for gold climbing 1% in early Asian trade to $1,503.09.
Moves in Asian share markets were small, however, with Japan shut for a public holiday.
MSCI’s broadest index of Asia-Pacific shares outside Japan was a tick lower at 515.4. Australian shares were down 0.1% while South Korea’s KOSPI was a tad higher.
E-Minis for the S&P 500 were off 0.4% while those for the Dow eased 0.3%.
“If risk appetite collapses due to fears of worsening middle east tensions in the wake of any retaliation to the drone attacks, some emerging markets could face a double whammy of pressures,” said Mitul Kotecha, Singapore-based senior emerging markets stratgist at TD Securities.
“In Asia, the most risk sensitive currencies are Indian rupee, Indonesian rupiah and Philippine peso .”

Bonds and currencies
Among major currencies, the Saudi news pushed the yen up 0.4% to 107.64 per dollar while the Canadian dollar rose 0.5% in anticipation of higher oil prices.
The euro was little moved near a three-week top while the pound hovered near Friday’s two-month highs. That left the greenback down 0.15% at 98.105 against a basket of six major currencies.
The risk-sensitive Australian dollar was down 0.5% against the yen, snapping nine straight days of gains. The kiwi dollar slipped to a one-week low on the yen.
“One immediate question this (attack) poses for bond markets is whether a further rise in the inflation expectations component of bond yields — which have proved historically sensitive to oil prices — will give this month’s sharp bond market sell-off fresh impetus,” Attrill added.
“Or will safe haven considerations dominate to drive yields lower? Watch this space.”
In early Asian trading, futures for US 10-year Treasury notes rose 0.3%, indicating yields may slip when cash trading begins.
Global bonds were sold off last week, sending yields higher, led by a broader risk rally on hopes the United States and China would soon end their long trade war. Better-than-expected US retail sales data also boosted sentiment.
Chinese data for industrial production, retail sales and fixed asset investment will be released later on Monday, which could help set the tone for this week’s trade.
Investors also await the outcome of the US Federal Reserve’s policy meeting on Wednesday at which it is widely expected to ease interest rates and signal its future policy path.