Partial lifting of coronavirus curfew to revive Saudi business activity: experts

An aerial view shows deserted streets in the Saudi coastal city of Jeddah, during the novel coronavirus crisis. Construction companies in the Kingdom are allowed to resume their activities. (AFP)
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Updated 27 April 2020

Partial lifting of coronavirus curfew to revive Saudi business activity: experts

  • Kingdom’s stock exchange reacted positively to the decree to climb 3.54 percent

RIYADH: Experts have welcomed a royal decree to partially lift the coronavirus curfew across Saudi Arabia, saying it will revive business activity and increase consumption. 

The decree means the curfew is off from 9 a.m to 5 p.m. from April 26 to May 13.

Saudi Arabia’s main stock exchange reacted positively to the decree to climb 3.54 percent, the most since March 10. Seven companies reached the daily limit of 10 percent, 194 companies closed up and only one company closed down.

Bandar Alkhorayef, minister of industry and mineral resources, thanked in a tweet the country’s leadership for taking the decision.

“We ask all entities in the industry sector to comply with the preventive measures mentioned in the royal decree,” he added.

Construction companies and factories are allowed to resume their activities without restrictions on time, according to the nature of their business, the state news agency, SPA reported. 

Wholesale and retail trade stores, as well as commercial centers and malls, are also reopening. Places that will stay shut are those that do not achieve physical distance, including beauty salons, sports and health clubs, cinemas, restaurants and cafes. 

Mazen Alsudairi, the head of research at Al Rajhi Capital, said the decision would increase the scale of economic consumption and that this uptick would benefit sectors that had been hit hard by the curfew. 

“Consumption will improve, grocery retailers will continue maintaining the lead (with revenue). Other companies will also be relieved from (having) low or zero revenues such as mall retailers and retailers that were forced to switch to e-commerce,” he told Arab News.

Alsudairi said that other sectors such as construction would already be under pressure with Ramadan, which usually witnesses a slowdown of construction activities, such industries were unlikely to benefit from the decision, he added. 

He said he expected only a slight improvement in revenues for the manufacturing sector, especially those producing construction-related goods.

“In general, this is a period for the government to assess the impact of the decision to partially lift the curfew and the capability to move further, to release or loosen the restrictions further or maintain them.”

Jamal Banoon, economist and journalist writer, said the measures would speed up the country’s recovery.

“These measures will speed up the recovery of the Saudi economy and compensate the Kingdom for the losses incurred during the last two months, especially the SMEs and MSMEs that were really hit by the pandemic,” he told Arab News. “Most of the shops are going to give offers and discounts to shoppers to encourage them to come back to the malls and to whet the customers’ appetite for buying.”

He said the weeks leading up to May 13 would be a test to see if the market dealt with the partial curfew lift well by forcing people to take the appropriate preventive measure and apply the rules of social distancing. “This will facilitate our return to normal life in the period after,” he added.

Oil surges on hopes of new deal on output cuts

Updated 02 June 2020

Oil surges on hopes of new deal on output cuts

  • Brent price has doubled in five weeks
  • OPEC talks may be brought forward

DUBAI: Oil prices surged toward $40 a barrel on Monday as hopes rose for an early agreement to extend the big production cuts agreed by Saudi Arabia and Russia under the OPEC+ alliance.

Brent, the global benchmark, jumped by more 9 percent to nearly $39, continuing the surge that has doubled the price in five weeks — the best performance in its history. It recovered after record supply cuts agreed between the 23 countries of the OPEC+ partnership, and enforced cuts in US shale oil.

DME Oman crude, the regional benchmark in which a lot of Saudi Aramco exports are priced, rose above $40 a barrel for the first time since early March.

Market sentiment was buoyed by the possibility that the Organization of Petroleum Exporting Countries would agree with non-OPEC members to extend the cuts for a longer period than was agreed in April.

Oil analysts expect OPEC to fast track a “virtual” meeting to formally agree to maintaining cuts at the record 9.7 million barrels a day level. The meeting was scheduled for June 9, but bringing it forward would allow producers more time to set pricing levels.


This section contains relevant reference points, placed in (Opinion field)

An official with one OPEC delegation told Arab News there was consensus among the 23 OPEC+ members for the new date, which could be as early as June 4. The meeting will also consider how long the current level of cuts would be maintained. Some OPEC members want it to run to the end of the year, other producers would prefer a two-month extension.

Omar Najia, global head of derivatives with trader BB Energy, told a forum run by Gulf Intelligence consultancy: “I’d be amazed if OPEC did not extend the higher level of cuts. As long as Saudi Arabia and Russia continue saying nice things to each other I’d expect the rally to continue.”

A Moscow source close to the oil industry said energy officials there had come to the conclusion that “the deal is working” and it was important to keep prices at an “acceptable” level.

Sentiment was also affected by a comparatively high level of compliance with the new cuts, running at about 75 percent among OPEC+ members, with only Iraq and Nigeria noticeable under-compliers.

Robin Mills, chief executive of Qamar Energy, said: “That’s where I’d expect it to be after two months in such a fluid situation. It will be even better in June.”