Spike in tensions but no oil market shock, says IEA

Spike in tensions but no oil market shock, says IEA
The global oil market is well placed to withstand any escalation in geopolitical tensions, according to the IEA. (Shutterstock)
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Updated 17 January 2020

Spike in tensions but no oil market shock, says IEA

Spike in tensions but no oil market shock, says IEA
  • Strategic reserves play key role in minimizing disruption to global supply amid US-Iran face-off, agency says

PARIS: The brief spike in Middle East tensions as the US and Iran faced off has served as a reminder of the havoc disruptions in supply from the key oil-producing region could wreak on the global economy, the International Energy Agency (IEA) said on Thursday.

But it said ample stocks and production elsewhere mean the world is relatively well placed to react to a crisis.

Washington and Tehran are currently in a standoff after tit-for-tat military actions over the past two weeks that had sparked fears of a large-scale confrontation that could choke off the Strait of Hormuz through which 20 percent of global oil supplies flow.

“We cannot know how the geopolitical situation will play out over time, but for now the risk of a major threat to oil supplies appears to have receded,” the IEA said in its latest monthly report on oil markets.

It noted that oil prices have receded after jumping $4 per barrel, much as they did in September when a series of attacks on Saudi oil facilities briefly knocked out part of the production of the key exporter.

“Today’s market where non-OPEC production is rising strongly and OECD stocks are 9 million barrels above the five-year average, provides a solid base from which to react to any escalation in geopolitical tension,” said the Paris-based organisation, which advises industrial nations that are members of the Organisation for Economic Cooperation and Development on energy policy.

“As a back-up resource, the value of strategic stocks has once again been confirmed.”

The IEA was created in the wake of the 1973 oil shock provoked by an embargo imposed by OPEC and IEA members now hold reserves worth three months of net imports.

The oil market has been driven in recent years by a surge of non-OPEC production that has outstripped demand, with OPEC and its allies moving to restrain production to support prices.

The IEA’s forecasts see faster growth in demand for oil this year thanks to expectations that global growth will pick up as trade tensions diminish.

However, the 2.1 million barrels per day (mbd) growth in non-OPEC supplies will far outpace the increased demand of 1.2 mbd, putting further pressure on OPEC and its allies to further cut production.

During 2019, falls in OPEC production nearly completely offset a rise in production from countries outside the group.


Abu Dhabi-owned GlobalFoundries may bring forward IPO as it pours $1.4bn into fab expansion

Abu Dhabi-owned GlobalFoundries may bring forward IPO as it pours $1.4bn into fab expansion
Updated 47 min 23 sec ago

Abu Dhabi-owned GlobalFoundries may bring forward IPO as it pours $1.4bn into fab expansion

Abu Dhabi-owned GlobalFoundries may bring forward IPO as it pours $1.4bn into fab expansion
  • Global semiconductor shortage boosts demand for chips
  • Shortage has hit automaker output worldwide
WASHINGTON: Abu Dhabi’s GlobalFoundries will invest $1.4 billion this year to raise output at three factories in the United States, Singapore and Germany, as a global shortage of semiconductors has boosted demand for chips, its chief executive said.
The US-based company, a unit of Abu Dhabi’s state-owned fund Mubadala, may also bring forward its initial public offering to late 2021 or the first half of next year, from a previous target of late 2022 or early 2023.
It is aiming for revenue growth of 9 percent to 10 percent from just over $5.7 billion last year.
Automakers and electronics producers are facing a global shortage of chips which has fueled manufacturing delays.
“The adoption of technology that would normally have taken a decade happened in one year in 2020 because of COVID-19,” GlobalFoundries CEO Thomas Caulfield told Reuters.
Before the pandemic, the chip industry was projected to grow 5 percent over a five-year horizon and now it has accelerated to grow at twice that rate, he said.
While the supply crunch has resulted in car makers such as Volkswagen, Ford and General Motors cutting output, an increase in supply would create further demand.
GlobalFoundries said the $1.4 billion, which will be divided evenly among its fabs in Dresden, Germany, Malta, New York and Singapore, will begin to ramp up output through 2022 to produce chips from 12 to 90 nanometers.
About a third of the investment will come from clients seeking to lock in supply over several years, Caulfield said, forecasting a 20% rise in production next year following an expected 13 percent increase in 2021.
If demand continues to rise GlobalFoundries could build a new plant adjacent to its Malta, New York, plant after securing a purchase option agreement for about 66 acres of undeveloped land last year.
But a decision to break ground there would hinge on the US Congress funding a set of measures to incentivise chip manufacturing in the US known as the Chips Act, which was approved last year.
“It’s not a question of ‘if,’ it’s just a question of ‘when,’... And a key element of going forward will be the funding of the Chips Act,” Caulfield said.
US President Joe Biden, who took office in January, has pledged to support the effort, and senators are looking at providing emergency funding for the law as part of a bigger package to counter China’s rise, as chipmaking has shifted to Asia.
GlobalFoundries is the world’s third-largest foundry by revenue behind Taiwan Semiconductor Manufacturing and Samsung Electronics but ranks second when factoring out the part of Samsung’s foundry business that makes chips for other elements of the South Korean firm.

Oman has fastest port operations in the world, UN body says

Oman has fastest port operations in the world, UN body says
Updated 03 March 2021

Oman has fastest port operations in the world, UN body says

Oman has fastest port operations in the world, UN body says
  • The Sultanate earlier announced the National Logistics Strategy 2040 in a bid to become a global logistics hub

DUBAI: Oman’s ports have been recognized by the UN’s trade and development arm as first in the world in terms of speed of container handling.

According to the United Nations Conference on Trade and Development (UNCTAD), container vessels only stay in the Sultanate’s ports for an average of 12.5 hours – including all entry, exit, loading, and unloading operations.

The Sultanate earlier announced the National Logistics Strategy 2040 in a bid to become a global logistics hub.

The plan involves adding new maritime routes and more international partnerships to ease the movement of goods.

Oman joined Poland and Gulf neighbor UAE at the top of UNCTAD’s list.


Dubai firm acquires Paris towers in $300m deal

Dubai firm acquires Paris towers in $300m deal
Updated 03 March 2021

Dubai firm acquires Paris towers in $300m deal

Dubai firm acquires Paris towers in $300m deal
  • The acquisition of Altais Towers in the east of the French capital is GII’s first purchase in the city and the firm’s largest real estate deal to date

DUBAI: Gulf Islamic Investments (GII), a Dubai-based Shariah-compliant financial services firm, has bought a commercial tower block in Paris, in a deal valued at around $300 million.

The acquisition of Altais Towers in the east of the French capital is GII’s first purchase in the city and the firm’s largest real estate deal to date, bringing the value of its total investments in Europe to around $800 million.

Mohammed Al-Hassan, founding partner and co-CEO of GII, said: “Altais Towers is an exciting marker in GII’s growth trajectory, as we head toward achieving a total AUM (assets under management) of $3 billion by the end of 2021.

“This acquisition highlights our deep and diversified global experience as we expand into new geographies and execute transactions of this scale and complexity, especially amidst the challenges presented by the coronavirus disease (COVID-19) pandemic.”

Altais Towers is located in the Parisian suburb of Montreuil and comprises two towers with 28 and 16 floors, respectively.

Founded in 2014, GII has nearly $2 billion of assets under management and is currently looking at other projects in Europe, namely in the UK and Germany.


Alhokair and Arabian Centres boost online footprint with Vogacloset deal

Alhokair and Arabian Centres boost online footprint with Vogacloset deal
Updated 03 March 2021

Alhokair and Arabian Centres boost online footprint with Vogacloset deal

Alhokair and Arabian Centres boost online footprint with Vogacloset deal
  • The pandemic has encouraged Saudi retail groups to rapidly ramp up their e-commerce investments in response to the boom in online shopping

DUBAI: Saudi retail giants Alhokair and Arabian Centres Company (ACC) agreed to acquire a combined majority stake in Vogacloset, a UK-based online fashion platform.
It sells some 400 brands across women’s, men’s and kids’ fashion.
Post-transaction, Alhokair and ACC will own a combined 51 percent stake in Vogacloset, they said in a statement.
 “This strategic investment in a sizeable and profitable regional e-commerce player is the most direct route for Alhokair to extend its leadership position in its core Saudi market – from offline to the online space, while safeguarding our competitive market position,” said Marwan Moukarzel, CEO of Alhokair.
The pandemic has encouraged Saudi retail groups to rapidly ramp up their e-commerce investments in response to the boom in online shopping.
Alhokair trades in around 1,800 stores across 100 shopping malls in 13 countries. Meanwhile Arabian Centres operates 21 malls across the Kingdom

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Oman said to agree $2.2bn loan with large group of banks

Oman said to agree $2.2bn loan with large group of banks
Updated 03 March 2021

Oman said to agree $2.2bn loan with large group of banks

Oman said to agree $2.2bn loan with large group of banks
DUBAI: Oman has raised $2.2 billion with a loan in a deal which attracted interest from a large group of regional and international lenders, sources said.
The Gulf state, rated sub-investment grade by all major credit rating agencies, had been working with a group of banks to raise a $1.1 billion loan, which could have gone up to $2 billion depending on market appetite, sources told Reuters in January.
The deal was eventually completed at $2.2 billion last week, the sources said. Oman’s ministry of finance did not immediately respond to a request for comment.
Oman expects a 2021 budget deficit of 2.24 billion Omani rials ($5.82 billion). To make up the shortfall, the government aims to raise about 1.6 billion rials through borrowing and draw 600 million rials from its reserves.
It was the first Gulf government to tap the international bond markets this year, raising $3.25 billion in three-part bonds in January, taking advantage of positive market conditions to replenish state coffers battered by the coronavirus crisis.
The new loan has a 15-month maturity with the possibility to extend it by an additional 12 months at the borrower’s discretion, the sources said.
It attracted interest from more than a dozen international and regional lenders, which offered around $3 billion for the deal, one of the sources said.
Oman’s external debt maturing this and next year amounts to $10.7 billion, or about 7.5% of gross domestic product, S&P Global Ratings has said.