Aramco CEO says news on Saudi oil sale in Yuan is speculation as Capital Economics rules it out

Update Aramco CEO says news on Saudi oil sale in Yuan is speculation as Capital Economics rules it out
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Updated 20 March 2022

Aramco CEO says news on Saudi oil sale in Yuan is speculation as Capital Economics rules it out

Aramco CEO says news on Saudi oil sale in Yuan is speculation as Capital Economics rules it out

RIYADH: Aramco CEO Amin Nasser said the news on Saudi Arabia considering sales of its oil in Chinese currency is “speculation” at a time when researchers such as Capital Economics ruled out the move.

Asked by media on Sunday on the news, the CEO said that he doesn't comments on rumours and speculation.

A recent report from the Wall Street Journal suggested that Saudi Arabia is in talks with China to price and receive payments for some of its oil sales in renminbi rather than US dollars. The talks have been “off and on for six years,” but discussions have intensified in recent months.

Even if Saudi Arabia accepts renminbi for sales to China, it would still be accepting dollars for around three-quarters of its oil trade. What’s more, the dollar peg has been the fundamental anchor of macroeconomic stability in Saudi Arabia for decades and policymakers are unlikely to be in a rush to change.

Jason Tuvey, senior emerging markets economist, Capital Economics

“For many countries (including Saudi Arabia and China), the harsh sanctions imposed by the US on Russia have raised questions about the wisdom of transacting in dollars and holding dollar-denominated assets as part of their official reserves,” Jason Tuvey, senior emerging markets economist, at Capital Economics wrote in a note.

Saudi Arabia is one of those few countries, which run a trade surplus with China. Over the past decade, it has averaged around $24 billion.

According to Tuvey, if all trade with China were to be conducted in renminbi, Saudi Arabia would quickly accumulate large holdings of the renminbi. Within five years, all else equal, the renminbi could easily make up as much as 20-25 percent of the Kingdom’s official FX reserves. 

This is a scenario that the economist rejects as unlikely as he believes the Kingdom “may be reluctant to hold large amounts of FX reserves in renminbi, not least because of concerns regarding convertibility and the implications for its ability to defend the dollar peg.”

However, the Kingdom may decide to accept renminbi for only a portion of oil sales to China, and/or it could recycle renminbi receipts and increase goods and services exports from China, wrote the expert.
It has been suggested that accepting the renminbi for oil sales may prompt Saudi Arabia to move away from its dollar peg and to adopt a peg to a basket of currencies, similar to Kuwait.

Tuvey, is, however, skeptical. According to him, “even if Saudi Arabia accepts renminbi for sales to China, it would still be accepting dollars for around three-quarters of its oil trade. What’s more, the dollar peg has been the fundamental anchor of macroeconomic stability in Saudi Arabia for decades and policymakers are unlikely to be in a rush to change.”

The exclusion of key Russian banks from the SWIFT system in the wake of the Russian invasion of Ukraine and reports about the emergence of alternatives developed by Moscow and Beijing has once again ignited a debate about the future of the greenback.

China has had been working for years to internationalize the yuan. The current crisis, however, has given a new impetus to those efforts or at least forced the world into rethinking its relationship with the US dollar. 

 


Yousef Al-Benyan resigns as CEO of SABIC to serve as Education Minister

Yousef Al-Benyan resigns as CEO of SABIC to serve as Education Minister
Updated 25 sec ago

Yousef Al-Benyan resigns as CEO of SABIC to serve as Education Minister

Yousef Al-Benyan resigns as CEO of SABIC to serve as Education Minister

RIYADH: Chemical giant Saudi Basic Industries Corp. has announced the resignation of its CEO Yousef Al-Benyan, after being appointed Minister of Education by Royal Decree.

Accordingly, SABIC’s Board appointed Abdulrahman Al-Fageeh as acting CEO for six months effective Sep. 28, 2022, according to a bourse filing.

The Riyadh-based company reported a 33 percent surge in first-quarter profits to SR6.47 billion, driven by a 40 percent rise in sales.


Business leaders bracing themselves for more ‘disruptive forces’ in wake of COVID-19

Business leaders bracing themselves for more ‘disruptive forces’ in wake of COVID-19
Updated 29 min 31 sec ago

Business leaders bracing themselves for more ‘disruptive forces’ in wake of COVID-19

Business leaders bracing themselves for more ‘disruptive forces’ in wake of COVID-19

RIYADH: Business executives in Saudi Arabia are preparing for an increasing number of “disruptive forces” hitting their firms in the wake of the COVID-19 pandemic, according to a study.

The 2022 Middle East Disruption Index, produced by financial advisory and global consulting firm  AlixPartners, surveyed CEOs and executive leaders in the Kingdom, as well as the UAE, to gauge their top concerns and the impact of disruption on their organizations. 

Although over 70 percent of executives stated their company was effective in responding to disruptive forces, the same percentage believe the frequency of disruptive forces will continue at the same pace or even increase over the next two to three years.

The areas of greatest concern include supply chain management, workforce and digital.

“It is no longer traditional economic forces at work that are reshaping the economy, but rather the ever-accelerating pace of change and disruption,” said Karl Nader, managing director at AlixPartners. 

“This means leaders can no longer ‘wait and see’ but must respond by being agile, envisioning the future and investing in the next,” he added.


Saudi Arabia-Jordan electricity interconnection project set to go live by 2025

Saudi Arabia-Jordan electricity interconnection project set to go live by 2025
Updated 32 min 2 sec ago

Saudi Arabia-Jordan electricity interconnection project set to go live by 2025

Saudi Arabia-Jordan electricity interconnection project set to go live by 2025

RIYADH: The electricity interconnection project between Saudi Arabia and Jordan is expected to become commercially operational in the second half of 2025 as both countries look to officially sign related agreements later this year. 

Both nations had entered into a memorandum of understanding in 2020 to develop the 164-km electricity interconnection between Qurrayat in Saudi Arabia and the eastern part of Jordan's capital city Amman.

In a meeting held on Sept. 27 in Amman, delegates from Jordan’s National Electric Power Co. and the Saudi Power Procurement Co. discussed various modalities of the project, according to Jordan News Agency. 

This is part of the move to finalize and officially sign three agreements — executive, operational and commercial — by end of this year.  

NEPCO’s Director Amjad Rawashdeh in a press statement said that the two sides agreed that the project would be commercially operated in the second half of 2025.

He added that the project is expected to increase the operational efficiency and reliability of the two countries’ power systems. The project will provide necessary support and reserves while allowing both countries to exchange electricity at times of peak demand. 

Rawashdeh explained the importance of electric connection systems in reducing costs and increasing grid stability.

He said this is because the transition to flexible networks and electric connection systems have become a necessity in modern electric power and the main pillar of sustainable, green electric systems that depend on renewable energy.


TASI gains momentum as economic fears subside: Closing bell

TASI gains momentum as economic fears subside: Closing bell
Updated 38 min 51 sec ago

TASI gains momentum as economic fears subside: Closing bell

TASI gains momentum as economic fears subside: Closing bell

RIYADH: Saudi Arabia’s main index ended higher for a second session following a sharp drop earlier in the week sparked by economic concerns.

The Tadawul All-Share Index rose 1.39 percent to reach 11,120 at the end of Wednesday, while the parallel market Nomu rose 1 percent to 19,916.

Saudi oil giant Aramco ended with a 1.31 percent gain, while Rabigh Refining and Petrochemical Co. climbed 3.27 percent.

The Saudi National Bank, the Kingdom’s largest lender, increased by 0.65 percent, while Saudi British Bank increased by 0.95 percent.

The Kingdom’s highest valued bank, Al Rajhi, rose 0.25 percent, while Alinma Bank gained 0.29 percent.

The Saudi Public Transport Co. jumped 4.22 percent, after winning an SR88 million public bus transport project with Taif Municipality.

Maharah Human Resources Co. added 1 percent, after securing a long-term Murabaha loan worth SR200 million from Al Rajhi Bank.

National Gas and Industrialization Co. topped the gainers with a 9.94 percent gain, followed by Al Hassan Ghazi Ibrahim Shaker Co. with a 9.24 percent gain.

The fallers list was topped by Al-Baha Investment and Development Co. with a 3.06 percent decline, followed by Naqi Water Co. with a 2.64 percent decline.

 


Saudi Social Development Bank allocates $3.5bn to freelancers and 'productive' families

Saudi Social Development Bank allocates $3.5bn to freelancers and 'productive' families
Updated 44 min 8 sec ago

Saudi Social Development Bank allocates $3.5bn to freelancers and 'productive' families

Saudi Social Development Bank allocates $3.5bn to freelancers and 'productive' families

RIYADH: Saudi Arabia’s Social Development Bank has disbursed around SR13.2 billion ($3.5 billion) loans to freelancers and productive families, supporting 342,000 beneficiaries, as the lender looks to increase their contribution to the national economy. 

This takes the bank’s total financing since it started providing loans to SR138 billion while benefiting over 3 million citizens, Aleqtisadiah reported. 

SDB CEO Ibrahim Al-Rashid said that the bank continues to support the role of productive families and freelance work as it is important to promote local products and improve citizens’ quality of life.

The Saudi lender is conducting its Souq Addar exhibition to promote “microenterprises” in 36 cities. The exhibition provides entrepreneurs a platform to display their handmade and unique goods until Oct. 7, while helping the bank promote its products locally and internationally.

Al-Rashid, who inaugurated the event, confirmed that there is an expansion in support for freelancers and micro-enterprises.

SBD’s products and program development manager, Shereen Al-Abdulrahman, told Arab News that the bank hopes to enable businesses to grow big enough to participate in regional and international exhibitions.

The Souq Addar exhibition aims to explore other paths to enable families to benefit from development opportunities and resources through the non-profit sector.

Saeed Al-Zahrani, the CEO’s advisor, added that organizing such events enhances the bank’s great efforts to promote family products locally and internationally, as well as financing and supporting productive families in various fields.

In March, the SDB announced at the Gulf Entrepreneurship Congress in Riyadh that it will allocate more than SR11 billion ($2.9 billion) to support over 680,000 entrepreneurs in Saudi Arabia.

The bank supports many financing, training and sponsorship programs for entrepreneurs to help them develop their projects, the Saudi Press Agency reported.

SDB also signed several agreements with strategic partners to provide training to Saudi entrepreneurs. 

Also, in March, it signed a SR1.1 billion financing agreement with the ride-hailing firm Careem to provide 7,500 job opportunities to Saudi drivers. 

As per the agreement, SR150,000 in financing will be offered for each driver’s vehicle, in low installments for a period of three years, Alarabiya reported.