High oil prices to power Gulf economies amid inflation risks: Reuters poll

High oil prices to power Gulf economies amid inflation risks: Reuters poll
The expected growth in Kuwait at 6.4 percent, and in the United Arab Emirates at 5.6 percent, would be the fastest in around a decade. Image: Shutterstock
Short Url
Updated 26 April 2022

High oil prices to power Gulf economies amid inflation risks: Reuters poll

High oil prices to power Gulf economies amid inflation risks: Reuters poll
  • Saudi Arabia, the region’s largest economy and world-leading exporter of crude oil accounts for about about 80 percent of total exports 

BENGALURU: The Gulf Cooperation Council’s economic growth will accelerate this year to a pace not seen in a decade, according to a Reuters poll of economists, who said high inflation and a slowing global economy were the biggest downside risks.

Crude prices, a major driver for Gulf economies, shot up after Russia invaded Ukraine in February and have remained elevated, giving a major boost to economies in the oil and gas-rich region.

An April 12-22 Reuters poll predicted growth overall in the six GCC economies would average 5.9 percent this year, which would be the fastest since 2012.

“GCC economies have seen a relatively strong start to 2022. The hydrocarbons sectors have benefited from increased oil production so far this year, with crude oil production up 12 percent for the UAE and 19 percent over the same period for Saudi Arabia,” said Khtija Haque, chief economist at Emirates NBD.

“Survey data for the first quarter of the year point to a solid expansion in non-oil sectors as well, with strong growth in business activity and new work in the UAE, Saudi Arabia, and Qatar.”

For Saudi Arabia, the region’s largest economy and world-leading exporter of crude oil, about 80 percent — or 17 of 22 contributors — upgraded their forecasts from the previous poll in January.

It was expected to grow 6.3 percent in 2022, up from the 5.7 percent forecast three months ago, before slowing to 3.2 percent growth next year.

If that happens, 2022 growth would be the fastest since 2011, when oil averaged around $111 per barrel.

The expected growth in Kuwait at 6.4 percent, and in the United Arab Emirates at 5.6 percent, would be the fastest in around a decade.

Qatar, Oman, and Bahrain are expected to grow around 4 percent, the fastest in several years.

However, when asked for the top two downside risks to GCC economies this year, 10 of 12 economists who answered an additional question said high inflation and a slowdown in the global economy.

Inflation in most of the GCC economies has risen in recent months against the backdrop of high food prices caused by the Russia-Ukraine war.

Although modest in comparison to many other countries, GCC inflation is expected to rise above 2 percent this year, with the highest median forecast for Qatar at 3.5 percent, and the lowest for Saudi Arabia at 2.5 percent .

“In the face of higher commodity and global food prices, we have revised our 2022 inflation forecast for the GCC region to be about 3.5 percent from around 2.5 percent,” noted Ilker Domac, regional head of economics at Citi.

“Since GCC countries import 85 percent of their food, a sustained upward pressure on international food prices could pose a challenge for policymakers in the region.”

Also, uncertainty caused by the conflict in Ukraine could have an adverse impact on a global economy just emerging from the ravages of the pandemic.

The International Monetary Fund last week slashed its 2022 global growth forecast, citing war impact and describing inflation as a “clear and present danger”.

The GCC, highly dependent on revenues from energy exports, would face weaker demand from an economic slowdown - especially in China, one of the world’s biggest oil and gas importers.

“From the regional perspective, global growth concerns become a worry if they hit oil prices. Price pressures are certainly being felt though on the assumption inflation eases into 2023, the present trends should not derail efforts to keep non-oil sector recoveries on track”, said Maya Senussi, senior economist at Oxford Economics.


Arabian Plastic Industrial Co. to start trading on Nomu on Oct. 5

Arabian Plastic Industrial Co. to start trading on Nomu on Oct. 5
Updated 05 October 2022

Arabian Plastic Industrial Co. to start trading on Nomu on Oct. 5

Arabian Plastic Industrial Co. to start trading on Nomu on Oct. 5

RIYADH: Arabian Plastic Industrial Co.’s shares are scheduled to begin trading on Tadawul’s Nomu-Parallel Market today, Oct. 5.

APICO offered 1 million shares, or 20 percent of its SR50 million ($13 million) market capitalization.

The offering coverage was 15.43 times oversubscribed, with the offer price set at SR27 per share.

Established in 1996, APICO serves customers across different sectors, including but not limited to Almarai Co., flynas, TotalEnergies, and Nahdi Medical Co.

 

 


Saudi startup Jahez to acquire all shares in Marn Business for $16m

Saudi startup Jahez to acquire all shares in Marn Business for $16m
Updated 05 October 2022

Saudi startup Jahez to acquire all shares in Marn Business for $16m

Saudi startup Jahez to acquire all shares in Marn Business for $16m

RIYADH: Jahez International Co. for Information Systems Technology has signed an agreement to acquire all shareholders’ shares of Marn Business Information Technology Co. for SR60 million ($16 million).

The transaction is in line with the online food delivery platform Jahez’s strategy of expanding its business through acquisitions in order to take advantage of the growing opportunities in the industry, it said in a bourse filing.

The completion of this agreement requires the approval of relevant authorities, including approval from the General Authority for Competition.

The financial impact is expected to appear in the second half of the fiscal year 2022, it said.

Marn Business develops an eco-system by integrating digital services with different service providers to build systems for business owners.


Saudi paper manufacturer MEPCO gets CMA node for 33% capital raise to $177m

Saudi paper manufacturer MEPCO gets CMA node for 33% capital raise to $177m
Updated 05 October 2022

Saudi paper manufacturer MEPCO gets CMA node for 33% capital raise to $177m

Saudi paper manufacturer MEPCO gets CMA node for 33% capital raise to $177m

RIYADH: Jeddah-based Middle East Paper Co. received the Capital Market Authority’s approval to increase its capital to SR666 million ($177 million) in support of the company’s financial position and growth plans.

The Saudi-listed paper manufacturer’s plan calls for a 33 percent capital hike from the current capital of SR500 million, according to a bourse filing.

Subject to obtaining shareholders’ nod, the transaction will be conducted by granting shareholders one bonus share for every three shares held.


UAE healthcare provider Burjeel's IPO 29 times oversubscribed, final price set at $0.54

UAE healthcare provider Burjeel's IPO 29 times oversubscribed, final price set at $0.54
Updated 05 October 2022

UAE healthcare provider Burjeel's IPO 29 times oversubscribed, final price set at $0.54

UAE healthcare provider Burjeel's IPO 29 times oversubscribed, final price set at $0.54

RIYADH: The UAE-based private healthcare provider Burjeel Holdings set its final offering price at 2 dirhams ($0.54) per share following the completion of its bookbuild and public subscription.

The offering was oversubscribed multiple times as the total gross demand amounted to over 32 billion dirhams, implying a 29-fold oversubscription, the company reported.


Oil Updates — Crude slightly lower ahead of OPEC+ meeting; Fire in Nigerian oil wells 

Oil Updates — Crude slightly lower ahead of OPEC+ meeting; Fire in Nigerian oil wells 
Updated 05 October 2022

Oil Updates — Crude slightly lower ahead of OPEC+ meeting; Fire in Nigerian oil wells 

Oil Updates — Crude slightly lower ahead of OPEC+ meeting; Fire in Nigerian oil wells 

RIYADH: Oil prices moderated very slightly on Wednesday after gaining more than 3 percent in the previous session ahead of a meeting of the Organization of the Petroleum Exporting Countries and allies led by Russia, together called OPEC+, to discuss a big cut in crude output.

Traders said a stronger dollar was the main reason for the slightly easier prices, as it reduced demand from buyers using other currencies.

Brent crude fell 22 cents, or 0.2 percent, to $91.58 a barrel at 0427 GMT, after climbing $2.94 in the previous session.

US West Texas Intermediate crude futures fell 29 cents, or 0.3 percent, to $86.23 a barrel after gaining $2.89 in the previous session.

OPEC+ is expected to discuss output cuts as big as 2 million barrels per day, an OPEC source told Reuters.

The US is pushing OPEC+ producers not to go ahead with deep cuts, a source familiar with the matter told Reuters, as President Joe Biden looks to prevent a rise in US gasoline prices.

EU price cap on Russian oil will not apply to pipeline shipments: Hungary

A price cap for Russian oil proposed as part of the EU’s eighth round of sanctions against Russia will not apply to pipeline shipments, Hungary’s Foreign Minister Peter Szijjarto said in a statement late on Tuesday.

Hungary, which has been the most vocal critic of sanctions against Russia in the EU, largely relies on Russian crude shipments and Russian gas, both imported via pipelines.

Two oil wells operated by Nigeria’s Eroton on fire

Two oil wells operated by Nigerian firm Eroton Exploration and Production Limited caught fire on Monday and were still burning on Tuesday after the company hired a contractor to try to extinguish the fire, the agency responsible for detecting oil spills said.

It was not immediately clear if this was the same area where a well operated by Eroton spilled oil and gas into the Niger Delta for more than a week in June.

Eroton produces and exports crude from its Oil Mining Lease 18 block through the Nembe Creek Trunkline.

The National Oil Spills Detection and Response Agency said the fire broke out at two wells in Rivers state, in the Niger Delta. A boat suspected to have been engaging in the theft of crude oil was burnt to ashes at the site.

“The company has mobilized a vendor, which is expected to arrive at the incident location today, Oct. 4, 2022, to extinguish the raging fire from the wells, the agency will supervise the activity accordingly,” Idris Musa, head of NOSDRA said in a statement.

(With input from Reuters)