Islamic trade body pivots from oil to soil to help fight pandemic

Hani Salem Sonbol
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Updated 09 May 2020

Islamic trade body pivots from oil to soil to help fight pandemic

RIYADH: A Saudi-based trade finance group is re-purposing funding to help countries across the Islamic world meet challenges created by the coronavirus disease (COVID-19).

The International Islamic Trade Finance Corporation (ITFC), a unit of the Jeddah-based Islamic Development Bank, was set up to boost trade and improve living conditions across the Islamic world.

While in the past, the organization helped countries fund oil supplies, securing food imports is now becoming more important for some states in lockdown, according to CEO Hani Sonbol.

“Repurposing is very important to meet demands,” he told Arab News. “We classify COVID-19 as the worst crisis mankind has seen. The implications will be huge.”

With 57 member countries, the ITFC is stepping up its initiative dubbed “the three R’s” — Response, Rebuild, Relaunch.

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Islamic Development Bank is involved in projects across 57 member nations.

Sonbol said the organization was now busy with the response phase — financing medical supplies and food in a $300 million package.

That is expected to scale up as it moves into the Rebuild and Relaunch phases.

He added that many ITFC initiatives were being realigned to meet urgent trade finance needs.

“We have seen many integrated projects now are more into helping the member countries, providing medical supplies and knowledge sharing on how to really respond, from a medical point of view, to COVID-19 issues,” he said.

Looking forward, Sonbol said Islamic finance would play an important role in rebuilding economies and that its core philosophy of safeguarding human life made it well suited for the task.

“The ethical purposes of Islamic finance are very clear. Institutions should really think about how the future will look,  and try to see how to become relevant.”


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.

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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.”