Oil prices drop after OPEC+ decision despite omicron fears: Daily Virus Update

Oil prices drop after OPEC+ decision despite omicron fears: Daily Virus Update
Image: Shutterstock
Short Url
Updated 03 December 2021

Oil prices drop after OPEC+ decision despite omicron fears: Daily Virus Update

Oil prices drop after OPEC+ decision despite omicron fears: Daily Virus Update
  • Since August, the group has been adding an additional 400,000 barrels per day

DUBAI: Oil prices dropped on Thursday as OPEC+ decided to stick to plans to increase production by 400,000 barrels per day in January.

The drop came after Brent crude futures rose $1.24, or 1.8 percent, to $70.11 by 0748 GMT, having eased 0.5 percent in the previous session.

US West Texas Intermediate (WTI) crude futures gained $1.13, or 1.7 percent, to $66.70 a barrel, after a 0.9 percent drop on Wednesday.

December 02

Global oil prices have lost more than $10 a barrel since last Thursday, when news of omicron first shook investors.

The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, will likely decide on Thursday whether to release more oil into the market as previously planned or restrain supply.

Since August, the group has been adding an additional 400,000 barrels per day (bpd) of output to global supply each month, as it gradually winds down record cuts agreed in 2020.

The new variant, though, has complicated the decision-making process, with some observers speculating OPEC+ could pause those additions in January in an attempt to slow supply growth.

December 01

The OECD warned Wednesday that the omicron coronavirus variant threatens the global economic recovery as it lowered the growth outlook for 2021 and appealed for a swifter rollout of COVID-19 vaccines.

The global economy is now expected to expand by 5.6 percent this year, down from an earlier forecast of 5.7 percent, the OECD said in its updated economic outlook

 Nigeria’s public health authorities said Wednesday that the new COVID-19 variant, omicron, was identified in samples from three passengers travelling to the continent’s most populous country from South Africa.

“Genomic surveillance has now identified and confirmed Nigeria’s first cases of the B.1.1.529 SARS-CoV-2 lineage, now known as the omicron variant,” the head of Nigeria’s Centre for Disease Control, Ifedayo Adetifa, said in a statement.

Earlier, the UK’s health secretary, Sajid Javid, said it was likely the vaccines would remain effective against serious disease from the new variant. He added it could be two more weeks before more was known about the variant.

Japan has asked airlines to stop taking new incoming flight bookings over concerns about the virus variant.

“We have asked airlines to halt accepting all new incoming flight reservations for one month starting December 1,” a transport ministry official told AFP, adding that existing bookings would not be affected.

Oil prices rose more than 3 percent on Wednesday, recouping a big chunk of the previous session’s steep losses, as major producers prepared to discuss how to respond to the threat of a hit to fuel demand from the omicron variant of the coronavirus.

Brent crude futures rose $2.46, or 3.6 percent, to $71.69 a barrel at 0742 GMT, after rising to as high as $71.95 earlier in the day.

The benchmark had slumped 3.9 percent on Tuesday.

US West Texas Intermediate (WTI) crude futures rose $2.13, or 3.2 percent, to $68.31 a barrel, after a 5.4 percent drop on Tuesday.

The Organization of the Petroleum Exporting Countries (OPEC) will meet on Wednesday after 1300 GMT and ahead of a meeting on Thursday of OPEC+, which groups OPEC with allies including Russia.

November 30

Amid speculations on the impact of omicron on oil demand, the Saudi energy minister said it was too early to tell, adding OPEC+ was keen to monitor the situation.

The group of oil-producing countries has rescheduled its meetings to later this week to have more time in assessing the impact, Prince Abdulaziz bin Salman, told Arab News in an Aramco ceremony in Dhahran on Monday.

Earlier, Russian Deputy Prime Minister Alexander Novak said, there is “no need for emergency measures in the oil market.”

He added OPEC+ partners did not call to review the current deal.

Oil prices rebounded on Monday after a huge slump last week, which was led by fears brought by the new coronavirus variant.

Brent crude futures climbed $3.11, or 4.3 percent, to $75.83 a barrel by 0355 GMT, after falling $9.50 on Friday.

U.S. West Texas Intermediate (WTI) crude was up $3.47, or 5.1 percent, at $71.62 a barrel, having tumbled $10.24 in the previous session.

Oil prices plunged more than 10 percent on Friday, their biggest one-day drop since April 2020,  as the new variant spooked investors across financial markets.

There are worries the new variant could derail the global economic recovery, potentially hurting oil demand, while it has also added to concerns that a supply surplus could swell in the first quarter.

Economists at Goldman Sachs outlined four scenarios that could happen as the world cautiously navigates the situation. 

If omicron turns out to transmit faster than its predecessor, Delta, it will result in first-quarter global growth slowing to a 2 percent quarter-on-quarter annual rate.

The economists said if both the disease severity and immunity against hospitalizations are worse than for Delta, global economic growth will take a more substantial hit, but inflation impact will be “ambitious.”

On a slightly positive note, if omicron spreads slower than delta, it will have no significant effect on global growth and inflation, Goldman Sachs said.

If the new variant is more transmissible, but causes less severe disease, global growth could be higher than Goldman’s baseline.

November 29

Most Gulf stock markets ended lower on Sunday, with the Saudi and Dubai indexes suffering their biggest single-day fall in nearly two years as fears of a potentially vaccine-resistant coronavirus variant spooked investors.

Opinion

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

The World Health Organization on Friday designated the omicron coronavirus variant detected in South Africa as being “of concern” — the fifth variant to be given that designation

Saudi Arabia’s benchmark index slid 4.5 percent, dragged down by a 5.4 percent fall for Al Rajhi Bank and a 6.2 percent decline for Saudi Basic Industries.

The Kingdom halted flights from and to Malawi, Zambia, Madagascar, Angola, Seychelles, Mauritius and the Comoros Islands on Sunday owing to concerns related to the spread of the new COVID-19 strain, state news agency SPA reported on Twitter.

The latest pandemic developments also sent oil prices, a key catalyst for the Gulf’s financial markets, plunging by $10 a barrel on Friday for their largest one-day drop since April 2020. The new variant added to concerns that an oil supply surplus could swell in the first quarter.

“It’s obvious that traders are concerned about the implications of the newly mutated virus which brings back the lock-down memories from last year. If Saudi decides to impose more restrictive measures the economy will be impacted significantly and the growth prospects next year will vanish”, Mohammed Al-Suwayed, chief executive officer of Razeen Capital, said. He said the time is now suitable for investors to reinvest in the market since the share prices are relatively low.

Dubai’s main share index declined 5.2 percent, its biggest intraday fall since March 2020, with most stocks in negative territory.

Blue-chip developer Emaar Properties plunged 9.4 percent and budget carrier Air Arabia retreated by 7.1 percent.

In Abu Dhabi, the index fell 1.8 percent, weighed down by a 3.3 percent drop for telecoms company Etisalat and a 1.4 percent decline for First Abu Dhabi Bank, the country’s largest lender.

The UAE has suspended entry for travelers from South Africa, Namibia, Lesotho, Eswatini, Zimbabwe, Botswana and Mozambique from Nov. 29 over concerns about the new coronavirus variant, the state news agency reported on Friday.

In Qatar, the index slipped by 2.8 percent as investors shunned stocks across board, with petrochemicals group Industries Qatar leading the losses.

Egypt’s blue-chip index lost 1.3 percent, with top lender Commercial International Bank retreating by 0.8 percent.

(With Reuters)


Google to invest $1bn to push India's digitalization

Google to invest $1bn to push India's digitalization
Updated 14 sec ago

Google to invest $1bn to push India's digitalization

Google to invest $1bn to push India's digitalization

NEW DELHI: Google will invest up to $1 billion in partnership with India’s Airtel to provide affordable access to smartphones to over a billion Indians, the two companies said on Friday, according to AP.

The investment will help India’s small businesses adopt digital tools as India works to adopt digital education, payments and e-commerce amid the pandemic, Google said in a blog post.

It will also speed up the use of cloud-based computing for business. 

As part of the ‘Google for India Digitization Fund’ launched in 2020, Google will pay $700 million to acquire a 1.28 percent stake in Airtel. It is also committing up to $300 million for commercial agreements over the next five years, Airtel said in a statement.

The companies also plan to jointly develop software for 5G and other standards, it said.

Airtel is an Indian global communications solutions provider with over 480 million customers in 17 countries across South Asia and Africa.

Google’s services are accessed by over 100 million users in India. It has faced legal troubles with the Competition Commission of India which said the company has abused the dominant position of its Android system in the Smart TV market segment. 

Regulators contend that makers of Smart TVs have no alternative to Android and are therefore obliged to install Google’s apps.

Google has denied any violations, saying its licensing practices comply with the law.

— AP


End of Facebook’s cryptocurrency dreams points to challenges for stablecoins

End of Facebook’s cryptocurrency dreams points to challenges for stablecoins
Updated 28 January 2022

End of Facebook’s cryptocurrency dreams points to challenges for stablecoins

End of Facebook’s cryptocurrency dreams points to challenges for stablecoins
  • Facebook is said to be planning to sell the technical assets of Diem after facing regulatory pushback

LONDON: Facebook is said to be winding down its cryptocurrency project Diem and preparing to sell its assets following regulatory pushback in the US

The Diem Association, launched by Facebook in 2019 and supported by 25 businesses, will sell its technology to California-based Silvergate Bank for $200 million, the Wall Street Journal reported, citing people familiar with the discussions.

Originally named Libra, the crypto coin was initially planned to be backed by a basket of currencies, but under pressure from regulators narrowed its ambition to assuming the status of a stablecoin, backed one-to-one by US dollars.

Similar products already exist in the form of other stablecoins, such as Tether, Dai, Binance USD and USD Coin.

They are braced for action from regulators, who have shown an increasing interest in stablecoins and other crypto assets of late. Facebook’s failure to launch a preapproved coin does not bode well for them.

A report in November from the President’s Working Group on Financial Markets, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency called for urgent legislative action to limit the issuance of stablecoins to insured depository institutions and to enable their regulation.

They are most concerned about their ability to destabilize the financial system if there is a sudden run on withdrawals. The market for stablecoins is growing rapidly — up to nearly $130 billion as of the end of October from closer to $23 billion at the same time last year.

Stablecoins are mainly used in transactions involving other digital currencies, but they have the potential to be used in retail transactions as companies like Visa explore services relating to them.

However, there are reasons to believe stablecoins will not meet the same fate as Diem, which faced some unique challenges.

Because of Facebook’s size – it has about 2.9 billion users – it was always going to face greater scrutiny than rival products. It was liaising with regulators during a period of numerous scandals, including the Cambridge Analytica privacy row, which meant trust in the social media pioneer was historically low.

Diem hired former HSBC legal chief Stuart Levey as its first CEO and, in May last year, moved its headquarters from Switzerland to the US in an attempt to placate regulators. But the writing was on the wall when founder David Marcus left the company at the end of 2021.

However, Facebook’s parent company, Meta, has not given up all its crypto ambitions. It built a digital currency wallet, called Novi, and released it as a small pilot in October. Novi is central to its plans to pivot toward projects related to allowing its users to buy and sell non-fungible tokens, known as NFTs, which became a $40 billion market in 2021.

Don’t expect this to be the end of Meta’s crypto ambitions.

On the markets today, Bitcoin was down 0.6 percent to $36,379, while Ethereum declined 2.9 percent to $2,379.

However, outflows of $670 million of Bitcoin from centralized exchanges is a bullish sign for the largest cryptocurrency, according to CoinDesk. Most investors prefer to have direct custody of coins when they intend to hold them for the longer term, it said.


NAFT to increase to 500 gas stations in Saudi Arabia thanks to $300m Saudi Automotive Services deal

NAFT to increase to 500 gas stations in Saudi Arabia thanks to $300m Saudi Automotive Services deal
Updated 28 January 2022

NAFT to increase to 500 gas stations in Saudi Arabia thanks to $300m Saudi Automotive Services deal

NAFT to increase to 500 gas stations in Saudi Arabia thanks to $300m Saudi Automotive Services deal

RIYADH: NAFT Services will see its number of gas stations in Saudi Arabia more than double thanks to the SR1.1 billion ($293.1 million) deal with Saudi Automotive Services Co announced earlier this week.

The deal will see the automotive services firm, also known as SASCO, take an 80 percent stake in the gas station firm. 

The money will be used to expand NAFT's current network of 233 gas stations spread through the Kingdom to 500, SASCO’s Vice Chairman Sultan Al Hudaithi said in an interview with CNBC Arabia.

“We want to take advantage of this network to reach customers faster, whether individuals, companies or the government sector and to achieve synergy between benefiting from both SASCO and NAFT teams' expertises,” Al Hudaithi said.

“This is an important step to expand and shorten the time for natural growth. This acquisition enables us to rapidly spread in different regions in the Kingdom, and achieve more integration between the two companies,” he added.

Negotiations are underway with a group of local banks to finance the acquisition, and the percentage of self-financing is not determined yet, according to Al Hudaithi.

Once completed, the deal will see SASCO have a 5 percent share of the market.

The vice chairman said there will be progress in terms of services provided to the company's customers in the Kingdom.

On SASCO future performance, Al Hudaithi expected significant improvement in 2022, with Saudi recovery from the pandemic.

“With the return of schools, we expect the recovery to speed up in gas stations in general, as well as travel between cities,” he said.

 


Retail e-payments exceed Saudi Vision target in 2021, Central Bank says

Retail e-payments exceed Saudi Vision target in 2021, Central Bank says
Updated 28 January 2022

Retail e-payments exceed Saudi Vision target in 2021, Central Bank says

Retail e-payments exceed Saudi Vision target in 2021, Central Bank says

RIYADH: Electronic payments in retail surpassed the 55 percent target set out by the Financial Sector Development Program, FSDP, one of the main programs of Saudi Vision 2030.

The e-payments exceeded 57 percent of total transactions conducted in 2021, the Saudi Central Bank said in a statement.

Over 5.1 billion transactions were made through the national Mada payment system during 2021, with a growth rate of 81 percent compared to 76 percent in 2020, the statement said.

More than a million Point of Sale terminals were deployed by the end of 2021 compared to 721,000 terminals deployed in 2020.

Additionally, contactless payments methods accounted for 95 percent of all PoS transactions in 2021, alongside other electronic payment methods such as e-commerce payments, ‘SADAD’ system payments and the new Instant Money Transfer through ‘Sarie’ system and others.

The business sector had 84 percent of its total payment transactions electronic in 2021, compared to just 51 percent in 2019, marking a 65 percent increase in electronic payment share during these past two years.

Accordingly, major corporations rely on electronic payments to complete 99.6 percent of their transactions, while the same metric stood at 78 percent for Small Medium Enterprises, and 76 percent for micro enterprises, the Central Bank noted.

The Central Bank is working on promoting electronic infrastructure, expanding electronic payment activities and accelerating the electronic transformation of transactions, Governor of the Bank Fahad Almubarak said.

He added that this most recent achievement was driven by FSDP and the implementation of the bank's strategic plans for the payments sector, primarily aiming to reduce dependency on cash, and increase the rate of electronic payments to 70 percent by 2025.

Almubarak emphasized the joint efforts between the government and private sectors to increase payment choices and implement many payment digitization initiatives.


Egypt unveils 4-wheel natural gas alternative to imported tukuks

Egypt unveils 4-wheel natural gas alternative to imported tukuks
Updated 28 January 2022

Egypt unveils 4-wheel natural gas alternative to imported tukuks

Egypt unveils 4-wheel natural gas alternative to imported tukuks

Egypt has unveiled a four-wheeled light vehicle powered by petrol and natural gas that will replace the country's 3.5 million tuktuks in a bid to reduce their environmental footprint. 

The ministries of trade and industry and military production showed off a prototype of the new vehicle following Egyptian authorities decision on Tuesday evening to ban the import of tuktuks and set a plan to replace them using alternative vehicles.

Tuktuks are three-wheeled vehicles used as taxis, common in a number of countries including Egypt.

Minister of State for Military Production Mohamed Ahmed Morsi explained that this vehicle is a sample of a proposed project between the National Authority for Military Production and the private sector company GB Auto Ghabbour to provide an alternative four-wheeled vehicle. 

Trade and Industry Minister Nevin Gamea said the vehicle will be produced with a dual system engine, petrol and natural gas, which reduces the cost of transportation and operation and makes it environmentally friendly. 

The number of tuktuks in Egypt is approximately 3.5 million, according to estimates, of which just 10 percent have an official licence.

Some see them as a public nuisance while others find them a cheap, convenient method of transportation.