White House warns of ‘unintended consequences’ of Senate’s NOPEC bill

Update White House warns of ‘unintended consequences’ of Senate’s NOPEC bill
There is growing tension between the White House and OPEC+ over oil production (Shutterstock)
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Updated 06 May 2022

White House warns of ‘unintended consequences’ of Senate’s NOPEC bill

White House warns of ‘unintended consequences’ of Senate’s NOPEC bill

RIYADH: Anti-OPEC legislation going through the US congress could harm President Joe Biden’s efforts to bring stability to the oil markets, the White House has warned

A spokesperson for the administration said there are concerns over the “unintended consequences” of the move, which would give powers to US prosecutors to sue organizations for perceived anti-competitive actions in the oil markets.

When Congress passed a version of the bill in 2007, it died under veto threat from President George W. Bush who said it could lead to oil supply disruptions as well as “retaliatory action against American interests.”

The Senate Judiciary Committee has voted 17:4 to approve the No Oil Producing and Exporting Cartels Act, in a signal of the growing tension between the US and the Organization of Petroleum Exporting Countries and its allies, known as OPEC+.

The organization has been resisting calls from the US to sign off a dramatic increase in output amid a surge in energy prices.

On Thursday, OPEC+ agreed to stick to plans for a gradual oil output increase — amounting to 432,000 barrels per day in June.


Read more: OPEC+ sticks to production targets; agrees modest output rise


White House Press Secretary Jen Psaki was quoted by Bloomberg as saying that while Biden does not outright oppose the bill, “the potential implications and unintended consequences of this legislation require further study and deliberation.” 

“We are taking a look at it and certainly have some concerns about what the potential implications could be,”  she added.

Concerns over the bill — forms of which have been around for around 20 years — were also voiced by Mike Sommers, president of American Petroleum Institute.

He agreed there could be “serious, unintended consequences”, including giving OPEC members the green light to issue such measures on US firms.

The growing tension between the US and OPEC+ prompted former Saudi Intelligence chief Prince Turki Al-Faisal to insist it is the policies of the White House that are responsible for the country’s energy price rises.

In an interview with Arab News' Frankly Speaking with Katie Jensen, the Prince said: “When you say that Saudi Arabia has not budged on the issue of the oil problems that America is facing, basically America itself is the reason for the state that they’re in because of their energy policy.” 


Read more: Saudi Arabia not to be blamed for US’s rising energy costs: Prince Turki Al-Faisal


This view was shared by Republican senator Ted Cruz, who spoke out during a debate on the legislation.

“It is important for the American people to understand that the cause of the high prices at the gas pump right now is not Opec,”  he said, saying the Democrats "desperately trying to find a bad guy” for high oil prices.

Another Republican senator, John Kennedy, said Biden “does not want America to produce its oil and gas,” which has given increased market power to OPEC.

The decision by OPEC+ to sign off a modest production rise came a day after the EU proposed a phased oil embargo on Russia in its toughest measures yet to punish Moscow for its war in Ukraine.

EXPLAINER-Why NOPEC, the U.S. bill to crush the OPEC cartel, matters

WHAT IS THE NOPEC BILL?
The bipartisan NOPEC bill https://www.congress.gov/bill/117th-congress/senate-bill/977 would change U.S. antitrust law to revoke the sovereign immunity that has long protected OPEC and its national oil companies from lawsuits.
If signed into law, the U.S. attorney general would gain the ability to sue the oil cartel or its members, such as Saudi Arabia, in federal court. Other producers like Russia, which works with OPEC in wider group known as OPEC+ to withhold output, could also be sued.
It is unclear exactly how a federal court could enforce judicial antitrust decisions against a foreign nation. But several attempts at NOPEC over more than two decades have worried OPEC's de facto leader Saudi Arabia, leading Riyadh to lobby hard every time a version of the bill has come up.
The Senate Judiciary Committee is expected to pass the most recent version of the bill on Thursday.
To become law, the bill would then have to pass the full Senate and House and be signed by the president.
The White House has not indicated whether President Joe Biden supports the bill, and it is not clear whether the bill has enough support in Congress to get that far.

WHAT'S CHANGED NOW?
Previous versions of the NOPEC bill have failed amid resistance by oil industry groups like the American Petroleum Institute.
But anger has risen lately in the U.S. Congress about soaring gasoline prices that have helped fuel inflation to the highest level in decades, raising the chances of its success this time.
OPEC producers have rebuffed requests by the United States and allies to open the oil taps by more than gradual amounts as global consumers emerging from the COVID-19 pandemic and Russia's invasion of Ukraine keep oil prices boiling.
Russia, which typically has produced about 10% of the world's oil, could see crude output drop as much as 17% this year as Moscow struggles with Western sanctions.

POTENTIAL BLOWBACK
Some analysts said that rushing a bill through could lead to unintended blowback, including the possibility that other countries could take similar action on the United States for withholding agricultural output to support domestic farming, for example.
"It's always a bad idea to make policy when you are angry," said Mark Finley, a fellow in energy and global oil at Rice University's Baker Institute and former analyst and manager at the Central Intelligence Agency.
OPEC nations could also strike back in other ways.
In 2019, for example, Saudi Arabia threatened to sell its oil in currencies other than the dollar if Washington passed a version of the NOPEC bill. Doing so would undermine the dollar's status as the world's main reserve currency, reduce Washington's clout in global trade, and weaken its ability to enforce sanctions on nation states.
The kingdom could also decide to buy at least some weapons from countries other than the United States, hitting a lucrative business for U.S. defense contractors.
In addition, the kingdom and other oil producers could limit U.S. investments in their countries or simply raise their prices for oil sold into the United States - undermining the basic aim of the bill.
The United States and its allies are already facing big challenges securing reliable energy supplies, said Paul Sullivan, a Middle East analyst and non-resident senior fellow at the Atlantic Council's Global Energy Center. "The last thing we need to do is to throw a grenade into this."

U.S. OIL INDUSTRY OPPOSED
The top U.S. oil lobby group, the American Petroleum Institute, has also come out against the NOPEC bill, saying it could hurt domestic oil and gas producers.
One industry concern is that NOPEC legislation could ultimately lead to overproduction by OPEC, bringing prices so low that U.S. energy companies have difficulty boosting output. Saudi Arabia and other OPEC countries have some of the world's cheapest and easiest reserves to produce.
A wave of oil from OPEC producers, even at a time of concerns about Russian supply, "could chill drilling activity in the U.S. oil patch, potentially putting both domestic energy security and domestic economic recovery at risk," said ClearView Energy Partners, a nonpartisan research group in a note to clients.

(With input from Reuters)


India’s Gautam Adani: Asia’s richest man in the eye of a storm

Gautam Adani. (REUTERS)
Gautam Adani. (REUTERS)
Updated 7 min 44 sec ago

India’s Gautam Adani: Asia’s richest man in the eye of a storm

Gautam Adani. (REUTERS)
  • India’s Prime Minister Narendra Modi hails from the same state and their relationship has come under intense scrutiny by Modi’s opponents for years

NEW DELHI: India’s Gautam Adani, the school drop-out turned billionaire who rose to become Asia’s richest man, faces possibly the biggest challenge of his career after a US short seller cast doubts on his business practices, hammering shares in his companies and his reputation.
Adani, whose home state is Gujarat in western India, built his business empire from scratch after starting as a commodities trader. India’s Prime Minister Narendra Modi hails from the same state and their relationship has come under intense scrutiny by Modi’s opponents for years.
Adani’s business empire grew rapidly and his wealth ballooned. His interests span ports, power generation, airports, mining, edible oils, renewable power and more recently media and cement.
He rose to become the world’s third-richest person according to Forbes, with a net worth of $127 billion, trailing only Bernard Arnault and Elon Musk. Married to dentist Priti Adani, he has two sons, Karan and Jeet, both of whom are involved in the company businesses.
Despite his riches the 60-year-old, who comes from a middle-class textile family, was far lesser known than other billionaires in a country where many inherit their wealth.
His business style was described as “very hands on,” according to one person with direct knowledge of his dealings.
As Adani’s empire swelled, stocks of his seven listed companies surged — in some cases more than 1,500 percent in the last three years amid aggressive expansion. He denied allegations by Modi’s opponents that he had benefited from their close ties.
In a 2014 interview with Reuters, when asked if he was friends with Modi, Adani said he had friends across the political spectrum, but avoids politics.
He has said no one political leader is behind his success and when asked about Modi’s use of Adani corporate planes during the interview, Adani said Modi “pays fully.”
In recent years, the $220 billion Adani Group empire has attracted foreign investment — France’s TotalEnergies, for example, partnered with Adani last year to develop the world’s biggest green hydrogen ecosystem.
More recently, Adani has taken a pro-active approach to building his public image, giving interviews to local and foreign media.
Appearing in a popular Hindi TV show this month called the ‘People’s Court’, Adani sat in a mock witness box inside a courtroom setup and answered questions about his conglomerate — offering an unusual level of scrutiny. He described himself as “a shy person” and credited the rise of his popularity in part to the political attacks he has faced.
Modi’s government has denied allegations of favoring Adani.
“People got to know who Adani (was) because of constant targeting by Rahul ji during the 2014 elections and after that,” Adani said, during the show, referring to opposition Congress party leader Rahul Gandhi.
Three weeks later, shares of his group’s listed companies plunged on Friday, taking their cumulative losses to $48 billion this week. Short seller Hindenburg Research on Wednesday accused Adani’s businesses of improper use of offshore tax havens and flagged concerns about high debt. Adani has called the report baseless, and said he was considering taking action.
REPUTATION CHALLENGE
Adani Group’s website says its vision is to balance “growth with goodness” as it aims to build assets of national relevance and transform lives through self-reliance and sustainability.
Adani is no stranger to controversies. The most recent was months of protest by fishermen against construction of a $900-million port in southern India’s Kerala, in which he sued the state government and fishermen leaders. And in Australia, environmental activists for years protested against Adani’s Carmichael coal mine project in Queensland on concerns of carbon emissions and damage to the Great Barrier Reef.
His latest challenge is how to deal with an unprecedented share price rout as the group’s flagship firm Adani Enterprises launched the country’s biggest public secondary share offering this week, aiming to raise $2.5 billion.
The stock’s price on Friday fell well below the offer price, casting doubts on its success.
Image guru Dilip Cherian told Reuters the Hindenburg Report — and its fallout — could carry reputational risk for Adani but he could take action to limit that damage and reassure investors of the group’s financial and assets strength and ensure the share sale is a success.
“In terms of the kind of stellar rise he has had this is a hazard,” Cherian said.
Adani told India Today TV in December that people who were raising questions about the group’s debt had not done a deep dive into its financials, without saying who he was referring to.
As the market rout played out on Mumbai exchanges, Adani was seen heading to a meeting at the federal power minister’s office in New Delhi. It is not known what was discussed and Adani Group did not respond to a request for comment on Friday.
Adani Group’s consolidated gross debt stands at $23.34 billion, Jefferies says. While Hindenburg alleged key listed Adani companies had “substantial debt” which has put the entire group on a “precarious financial footing,” the Adani Group has repeatedly said its borrowings are manageable and no investor has raised any concern.

 


UAE fintech Wafeq secures $3m to double down on Saudi presence and expand to Egypt

UAE fintech Wafeq secures $3m to double down on Saudi presence and expand to Egypt
Updated 1 min 6 sec ago

UAE fintech Wafeq secures $3m to double down on Saudi presence and expand to Egypt

UAE fintech Wafeq secures $3m to double down on Saudi presence and expand to Egypt

CAIRO: Wafeq, a UAE-based financial software company for small and medium enterprises, raised $3 million in a seed funding round led by Raed Ventures with participation from Wamda Capital to double down on its Saudi presence as well as expand to Egypt. 

Launched in 2019, Wafeq is a fintech startup that provides easy-to-use software to empower accounting and finance operations for SMEs. 

In an exclusive interview with Arab News, Nadim Alamddine, Founder and CEO at Wafeq, said that Saudi Arabia is the largest and most important market for the company. 

“As such, we will double down on our growth here to continue offering our solutions to SMEs in the Kingdom. We already count some of the most successful SMEs and startups as our customers, and as we grow here, we will continue to help businesses become compliant with accounting regulations,” he stated. 

Empowering SMEs 

Built for the finance and accounting needs of SMEs in the region, Wafeq’s software is trusted by over 5,000 business owners and professional accountants processing over $117 million in monthly invoices. 

“Our platform is used by leading startups and SMEs from a diverse range of industries, including contracting, food and beverage, ecommerce, retail, and more,” Alameddine explained. 

SMEs comprise over 98 percent of all companies in Saudi Arabia, 90 percent in Egypt, and 94 percent in the UAE which provides Wafeq with a large market to fuel its operations. 

HIGHLIGHTS

Launched in 2019, Wafeq is a fintech startup that provides easy-to-use software to empower accounting and finance operations for SMEs.

Wafeq initially focused on startups and acquired customers in category-leading businesses such as UAE fintech Tabby, Saudi fintech Lean Technologies, Dubai fintech DAPI, UAE mobility-tech Fenix, and Saudi fintech PiFlow among many more.

Wafeq’s stand-alone e-invoicing API will play a huge role in its expansion to Egypt which allows startups and businesses to set up reliable third-party e-invoicing as well as stay compliant with regulations.

Moreover, digitization of accounting practices in all three markets is undergoing significant shifts with the introduction of mandatory e-invoicing and digital reporting. 

“Saudi Arabia has one of the most transparent and business-friendly accounting practices in the region, put in place by the Zakat, Tax and Customs Authority, also known as ZATCA,” Alameddine stated. 

In December 2021, ZATCA announced that all taxpayers will have to issue electronic invoices with a compatible government system and divided the implementation into two phases. 

In the first phase, taxpayers were required to issue e-invoices as well as get familiar with the implementation of the new system. In the second phase, which is set to be implemented in July 2023, taxpayers with VATable income exceeding SR 500 million will be obliged to integrate their e-invoices systems with the governmental FATOORAH platform. 

“SMEs still follow manual processes or use legacy software that are not compatible with local accounting requirements. Our strategy in Saudi Arabia will be to build more localised features, ensure the successful implementation of ZATCA phase 2, and bring our e-invoicing API solutions to more businesses here,” he added. 

Wafeq initially focused on startups and acquired customers in category-leading businesses such as UAE fintech Tabby, Saudi fintech Lean Technologies, Dubai fintech DAPI, UAE mobility-tech Fenix, and Saudi fintech PiFlow among many more. 

Egyptian Opportunities 

The company plans to utilize its funding to expand its current presence in Saudi Arabia and the UAE as well as fuel its entry to Egypt. 

Alameddine explained that as Egypt stands with the highest percentage of SMEs, businesses have very limited access to tech solutions that can support their operations. 

“From a policy standpoint, Egypt is bringing in requirements like e-invoicing and soon e-receipts for businesses and this is where Wafeq will have a positive impact. As we enter Egypt, we will not only look to acquire new customers but also create jobs locally,” he added. 

Wafeq’s standalone e-invoicing API will play a huge role in its expansion to Egypt which allows startups and businesses to set up reliable third-party e-invoicing as well as stay compliant with regulations. 

“Together with the backing of Raed Ventures and Wamda Capital, we are excited about our entry into Egypt while growing our presence in Saudi Arabia and the UAE,” Alameddine said. 

Talal Alasmari, founding oartner at Raed Ventures, said that Wafeq is solving a problem that impacts thousands of businesses in the region. 

“The digitalisation of accounting practices will truly transform how SMEs here operate, increasing operational transparency, creating efficiencies and contributing to economic growth,” Alasmari added. 

 The company operates a Software as a Service business model which complements its strategy to be easy and affordable for businesses to use its software. 

“Signing up for Wafeq is free, and customers starting a business can choose to use our basic package. For customers with more complex requirements, we have a range of pricing options that considers their needs, volume of invoicing and other factors,” Alameddine explained. 

Raed Ventures is a venture capital firm that was founded in 2015 in Dammam, Saudi Arabia, which focuses on early-stage startups and has invested in notable companies like SWVL, Tabby, and Trella. 

Founded in the UAE in 2014, Wamda Capital is one of the leading venture capital firms in the region with a portfolio of investments in over 70 companies including Careem and Nana.


Global Markets: Asian equities hit 9-month high as recession fears wane

Global Markets: Asian equities hit 9-month high as recession fears wane
Updated 27 January 2023

Global Markets: Asian equities hit 9-month high as recession fears wane

Global Markets: Asian equities hit 9-month high as recession fears wane

SINGAPORE: Asian stocks rose on Friday and were poised for their fifth straight week of gains after data highlighted a resilient US economy, boosting investor sentiment ahead of next week’s slate of central bank policy meetings.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose as much as 0.55 percent to hit an almost nine-month high of 562.10, and was last at 559.39.

The index, which fell nearly 20 percent last year, is up nearly 11 percent so far this month and is on course for its best-ever January performance. Japan’s Nikkei rose 0.05 percent.

European stock futures indicated that stocks were set to rise, with the Eurostoxx 50 futures up 0.3 percent, German DAX futures 0.28 percent ahead and FTSE futures up 0.16 percent.

The US economy grew faster than expected in the fourth quarter as consumers boosted spending on goods, data showed, but it could be the last quarter of solid GDP growth before the lagged effects of the Federal Reserve’s jumbo interest rate hikes are fully felt.

A separate report showed that labor market remains tight and could lead the Fed to keep interest rates higher for longer.

Ashwin Alankar, head of Global Asset Allocation at Janus Henderson Investors, said the headline GDP suggested robust economic activity and if a recession were to materialize it would be a shallower one.

“Overall GDP data was a ‘tale-of-two cities’ – good overall growth stemming from less-than-ideal drivers and prices mitigating but at a rate that is worrisome.”

Thursday’s set of data has raised investor hopes of a soft landing — a scenario in which inflation eases against a backdrop of slowing but still resilient economic growth.

Futures are pricing in a 94.7 percent probability of a 25-basis-point hike next Wednesday and see the Fed’s overnight rate at 4.45 percent by next December, or lower than the 5.1 percent rate Fed officials have projected into next year.

Data on US personal consumption expenditures due at 1330 GMT will provide further clues on inflation.

“The disinflation impulse is likely to stretch further, as has been evident from CPI releases lately, likely continuing to build a case for a 25 basis point rate hike by the Fed next week,” Saxo strategists said.

Next week will also feature Bank of England and European Central Bank meetings that will indicate the monetary policy path those central banks are likely to take.

Hong Kong’s Hang Seng Index was little changed after surging more than 2 percent on Thursday. Mainland China markets are due to resume trading on Monday after the Lunar New Year holiday.

Elsewhere in Japan, core consumer prices in Tokyo, a leading indicator of nationwide trends, rose 4.3 percent in January from a year earlier, marking the fastest annual gain in nearly 42 years.

The Japanese yen strengthened 0.1 percent to 134.04 per dollar as the data reinforced market expectations that quickening inflation could nudge the Bank of Japan to move away from its ultra-easy policy.

“We still think the policy change is a long way off,” ING regional head of research Robert Carnell said. “The spring salary negotiations are key to watch as wage growth is a prerequisite for sustainable inflation.”

The dollar index, which measures the US currency against six other peers, rose 0.23 percent, while the euro fell 0.22 percent to $1.0866.

Sterling was last trading at $1.23805, down 0.25 percent on the day.

Oil prices rose on expectations of a boost to demand from China’s reopening and after the strong US data. US West Texas Intermediate crude rose 0.41 percent to $81.34 per barrel and Brent was at $87.83, also up 0.41 percent on the day.


Oil Update: Prices firm on upbeat US economic data

Oil Update: Prices firm on upbeat US economic data
Updated 27 January 2023

Oil Update: Prices firm on upbeat US economic data

Oil Update: Prices firm on upbeat US economic data

LONDON: Oil prices rose for a second session on Friday, buoyed by better than expected US economic growth, strong middle distillate refining margins and hopes of a rapid recovery in Chinese demand.

Brent futures gained $1.17, or 1.34 percent, to trade at $88.64 a barrel by 1332 GMT. US crude was up $1.17, or 1.44 percent, at $82.18 and on track for its highest daily jump in percentage terms for two weeks.

Both benchmarks advanced by more than 1 percent on Thursday and are heading for a third straight week of gains.

Brent’s backwardation has strengthened to about $2.73 from less than a dollar at the start of the month.

Backwardation is a market structure in which front-month contracts are more expensive than those for later loading, indicating tight current supply.

Delegates from the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, meet next week to review crude production levels, with sources from the oil producer group expecting no change to current output policy.

The US Federal Reserve’s next decision on interest rates will be made at meeting over Jan. 31 and Feb. 1 against a backdrop of a dip to inflation and gross domestic product that grew by a faster than expected 2.9 percent in the fourth quarter.

“The positive batch of data gave oil prices a lift,” said PVM analyst Stephen Brennock.

Gains on US crude were capped by a 4.2 million barrel build in stocks at Cushing, the pricing hub for NYMEX oil futures, this week.

“We believe soaring middle-distillate prices and cracks are mostly behind crude’s bullish price action,” JPMorgan said in a note, pointing to heavy refinery maintenance and outages, plus the European ban on Russian refined products from Feb. 5.

In China, critically ill COVID-19 cases are down 72 percent from a peak early this month while daily deaths among COVID-19 patients in hospitals have dropped by 79 percent from their peak, pointing to a normalization of the Chinese economy and boosting expectations of a recovery in oil demand. 


11 agreements signed during global medical biotechnology summit in Saudi Arabia

11 agreements signed during global medical biotechnology summit in Saudi Arabia
Updated 27 January 2023

11 agreements signed during global medical biotechnology summit in Saudi Arabia

11 agreements signed during global medical biotechnology summit in Saudi Arabia
  • Delegates at the two-day event discussed biotech developments with the aim of shaping a modern and innovative healthy industry, organizers said
  • The speakers included international experts who highlighted the importance of global collaboration and industrial-academic cooperation to overcome health sector challenges

RIYADH: Eleven agreements were signed during the Riyadh Global Medical Biotechnology Summit 2023, which concluded in the Saudi capital on Thursday.

Delegates discussed a number of topics, ideas and ambitions related to the biotech sector during the two-day event, with the aim of helping to develop the field and enhance industrial and investment trends to build a modern and innovative healthy industry, organizers said.

The speakers included local and international experts and specialist researchers who explored topics that highlighted the importance of international collaboration and global industrial-academic cooperation to overcome unprecedented challenges in the health sector.

They stressed that investment in biotechnology will help to develop new products and achieve economic growth through global health solutions that advance scientific progress and innovation in industrial technology.

Eleven memorandums of understanding and cooperation agreements were signed during the summit between leading figures in the medical biotech sector, government agencies, and international and national companies.

An exhibition took place on the sidelines of the event, featuring local and international drug and vaccine manufacturers, along with research agencies and universities in the Kingdom. The participants showcased their latest research and innovations relating to drugs and vaccines, and their goals for enhancing drug security.

The summit was organized by the Ministry of National Guard Health Affairs, King Abdullah International Medical Research Center, and King Saud bin Abdulaziz University for Health Sciences, in cooperation with the Ministry of Investment. It took place under the auspices of Crown Prince Mohammed bin Salman and was inaugurated on his behalf by Minister of the National Guard Prince Abdullah bin Bandar.

Organizers said the aim of the two-day event was to highlight the importance of integration between ministries and other government organizations to improve quality in fields related to medical biotechnology.