Saudi oilfield attacks ‘had zero impact on economy,’ says finance minister

Saudi Finance Minister Mohammed Al-Jadaan. (SPA)
Updated 19 September 2019

Saudi oilfield attacks ‘had zero impact on economy,’ says finance minister

  • Weekend strikes failed to interrupt market supply or revenue flow, Kingdom’s finance minister says

LONDON: Saudi Finance Minister Mohammed Al-Jadaan said that the weekend attacks on the Kingdom’s oil infrastructure would have “zero” impact on the country’s economy as concerns about global oil supplies eased.

“In terms of revenues there is zero impact,” Saudi Finance Minister Mohammed Al-Jadaan told Reuters in an interview on the sidelines of an investor conference in Riyadh.

“Aramco continued to supply the markets without interruption and therefore revenues should continue as they are.”

In a separate interview with Bloomberg, Al-Jadaan said that after a boost to state spending, the government was “seeing momentum” in the non-oil economy and that he expected the sector to hit the 2.9 percent expansion forecast by the International Monetary Fund. Oil prices retreated after the comments, having jumped more than 20 percent at one point on Monday — the biggest spike since the 1990-91 Gulf War.

The International Energy Agency (IEA) said on Wednesday it remained in regular contact with authorities in Saudi Arabia and that for now, markets remain well supplied with ample stocks available. 

IEA member countries hold about 1.55 billion barrels of emergency stocks in government-controlled agencies, which amount to 15 days of total world oil demand. 

In addition, IEA member countries also hold 2.9 billion barrels of industry stocks as of the end of July, a two-year high that can cover more than a month of world
oil demand, the Paris-based agency said.

These stocks include about 650 million barrels of obligated emergency stocks, which can be made immediately available to the market when governments lower their holding requirements.

“Recent events are a reminder that oil security cannot be taken for granted, even at times when markets are well supplied, and that energy security remains an indispensable pillar of the global economy,” said Fatih Birol, the IEA’s executive director.

“This is why the IEA remains vigilant about the risk of disruptions to global oil supplies.”

The Saudi stock market gained 0.6 percent on Wednesday and Saudi dollar-denominated bonds also recovered after retreating on Monday. Earlier Commerzbank said that the oil price rally that followed the attacks was not sustainable and, despite rising regional tensions, lowered its 2020 price forecasts because of slowing demand growth.

The bank cut its Brent forecast for next year by $5 to $60 per barrel and kept its 2019 outlook unchanged at $65.

It also reduced its 2020 forecast for WTI to $57 from $62. Commerzbank forecast WTI to average $58 this year, Reuters reported.

While the attacks had “painfully demonstrated the risks to oil supply,” raising the possibility of short-term price spikes, prices should fall again in the coming weeks as long as there is no “total escalation of the situation,” analysts said.

 


India probes Flipkart, Amazon discounts after retailers complain

Updated 15 October 2019

India probes Flipkart, Amazon discounts after retailers complain

  • Products on Amazon, Flipkart listed at steep discounts in sale
  • Trader groups allege firms violating foreign investment rules

NEW DELHI: The Indian government is looking into whether hefty discounts offered on Walmart-owned Flipkart and Amazon.com during their online festive sales violate foreign investment rules, a commerce ministry official told Reuters.
India introduced new rules in February aimed at protecting the 130 million people dependent on small-scale retail by deterring big online discounts. The rules forced e-commerce firms to tweak their business structures and drew criticism from the United States, straining trade ties between New Delhi and Washington.
While Amazon and Flipkart say they’ve complied with the federal rules, local trader groups say the two companies are violating them by burning money to offer discounts — of more than 50 percent in some cases — during the ongoing festive sales.
Reuters reviewed emails and internal training material from Flipkart showing the company is in some cases offering to reduce, or forfeit, its sales commission from sellers that offer discounts.
The commerce ministry official said the government was reviewing complaints and evidence filed by the Confederation of All India Traders (CAIT), a group representing some 70 million brick-and-mortar retailers, alleging Amazon and Flipkart were violating the foreign investment rules.
The official declined to comment on possible action, but executives from Amazon and Flipkart were summoned to meet commerce ministry officials last week to discuss the matter.
Flipkart in a statement said it had a “good meeting” with government officials and it was “deeply committed to doing business the right way in India.”
Amazon said it had an “open & transparent discussion” with officials and has a high bar for compliance.
Seeking to attract shoppers around the key Hindu festival of Diwali, both retailers have placed full-page advertisements in top national daily the Times of India to showcase discount offerings stretching from Samsung and Apple phones to clothing and diapers.
“Customers are going online because of the unbelievable discounts. Because of this sales at offline businesses are down 30 percent to 40 percent this month,” CAIT’s secretary general Praveen Khandelwal said.
Two emails received by Flipkart sellers in September, just days ahead of the inaugural phase of the festive sales, showed it offering to partly fund discounts.
The company would “burn” 3 percent of the discount if a seller lowered a product price by 15 percent, or 9 percent if the seller discounted by 30 percent, said one of the emails.
In training material posted on Flipkart’s restricted website for its sellers, seen by Reuters, the company asks them to prepare for the festive season by saying “nothing is bigger than this” and explaining how they can benefit by discounting products for Flipkart’s premium customers.
“We want to ensure that you fetch as much profit from it as possible ... whatever the discount you are offering, half of that will be reimbursed to you by Flipkart,” a post said.
A Flipkart source said the incentives were compliant with Indian regulations and were aimed at promoting sellers’ earnings by effectively reducing the commission they pay.
All India Online Vendors Association, whose 3,500 members sell products on various online platforms including Flipkart, in a statement said fewer than 100 of its members benefitted from Flipkart’s partial discount funding, giving some sellers an unfair advantage.