EU split on Russian oil price cap level, talks to resume Thursday

EU split on Russian oil price cap level, talks to resume Thursday
Image: Reuters
Short Url
Updated 24 November 2022

EU split on Russian oil price cap level, talks to resume Thursday

EU split on Russian oil price cap level, talks to resume Thursday
  • The G7, including the United States, as well as the whole of the European Union and Australia, are slated to implement the price cap on sea-borne exports of Russian oil on Dec. 5

BRUSSELS: EU governments failed to reach a deal on Wednesday at what level to cap prices for Russian sea-borne oil under the Group of Seven nations scheme and will resume talks on Thursday evening or on Friday, EU diplomats said.

Earlier on Thursday representatives of the EU’s 27 governments met in Brussels to discuss a G7 proposal to set the price cap in the range of $65-$70 per barrel, but the level proved too low for some and too high for others.

“There are still differences on the price cap level. We need to proceed bilaterally,” one EU diplomat said. “The next meeting of ambassadors of EU countries will be either tomorrow evening or on Friday,” the diplomat said.

The G7, including the US, as well as the whole of the EU and Australia, are slated to implement the price cap on sea-borne exports of Russian oil on Dec. 5.

The move is part of sanctions intended to slash Moscow’s revenue from its oil exports so it has less money to finance its invasion of Ukraine.

But the level of the price cap level is a contentious issue — Poland, Lithuania and Estonia believe the $65-$70 per barrel would leave Russia with too high a profit, since production costs are around $20 per barrel.

Cyprus, Greece and Malta — countries with big shipping industries that stand to lose the most if Russian oil cargos are obstructed — think the cap is too low and demand compensation for the loss of business or more time to adjust.

“Poland say they can’t go above $30 per barrel. Cyprus wants compensation. Greece wants more time. It is not going to happen tonight,” a second diplomat said.

Some 70 percent to 85 percent of Russia’s crude exports are carried by tankers rather than pipelines.

The idea of the price cap is to prohibit shipping, insurance and re-insurance companies from handling cargos of Russian crude around the globe, unless it is sold for no more than the price set by the G7 and its allies.

Because the world’s key shipping and insurance firms are based in G7 countries, the price cap would make it very difficult for Moscow to sell its oil — its biggest export item accounting for some 10 percent of world supply — for a higher price.

At the same time, because production costs are estimated at around $20 per barrel, the cap would still make it profitable for Russia to sell its oil and in this way prevent a supply shortage on the global market.

Russian Urals crude oil already trades within the discussed range at around $68 per barrel.

EU diplomats said most EU countries, with G7 members France and Germany taking the lead, were supportive of the price cap, worried only about the ability to enforce it.


Saudi Arabia Vision 2030 'winners' need more private sector funding: S&P Global

Saudi Arabia Vision 2030 'winners' need more private sector funding: S&P Global
Updated 18 sec ago

Saudi Arabia Vision 2030 'winners' need more private sector funding: S&P Global

Saudi Arabia Vision 2030 'winners' need more private sector funding: S&P Global

RIYADH: Transport, tourism, and technology are among the sectors set to benefit from massive investments as Saudi Arabia pushes ahead with its Vision 2030 economic diversification plan, according to a report from S&P Global.

The ratings agency argues these industries, as well as healthcare and energy, will see significant spending growth over the medium and long term. 

However, in line with previous reports, S&P Global warned that the banking sector and the Kingdom’s sovereign wealth fund will not be able to provide all the investments required, with debt-capital markets needed to step in.

“It will fall to the debt-capital markets to support a large portion of these new opportunities, as the government and the banking sector alone will not be able to meet all the required funding needs,” said the report.

In its analysis of individual sectors, the report says that as one of the region’s largest countries, and with a significant young population, Saudi Arabia has planned out massive investment in the real estate sector as it continues to launch new programs to provide local housing. 

This is supplemented by a similar focus to develop the business and financial sectors through investments in commercial real estate as the Kingdom wants to become a regional industrial hub.  

On energy supply, the report says: “Utilities face the mammoth task of reducing Saudi Arabia’s fossil fuel dependency and meeting 70 percent of energy needs from renewables by 2030. We expect more public-private partnerships (PPPs) and significant investments in the country's grids.”

The Kingdom’s goal to become a technology hub will see digital infrastructure becoming a key enabler of transformational growth, with telcos staying at the heart of investments, stated the report, adding that high speed broadband, 5G, and a strategic digital hub will drive this change.  

Saudi Arabia’s push to become self-sufficient on food will see investments in the agriculture sectors as the Kingdom aims to increase local production and adopt modern farming techniques.  

“Despite strong demand and price increases, profitability in these sectors remains lower than before the pandemic, with rising input costs obscuring the path to recovery,” said the report.

The report also highlighted the developing tourism sector, “which has already received a substantial boost via aviation developments as well as projects intended to help attract 100 million visitors per year by 2030”. 

In the sector of healthcare, Saudi Arabia’s Ministry of Health will soon assume a regulatory role, stated the report, adding that the private sector is expected to play a more important part in this sector, attracting more than $65 billion in investments.  

“We do not anticipate taking any immediate rating actions on Saudi corporates — even as they carve out significant capital spending budgets over the next two-to-five years — given their healthy balance sheets and strong liquidity,” said the agency, adding: “Over time, however, we will reassess our ratings as projects are executed.”


TASI sheds 304 points as investors’ fears continues pushing the market to ‘red’

TASI sheds 304 points as investors’ fears continues pushing the market to ‘red’
Updated 47 min 18 sec ago

TASI sheds 304 points as investors’ fears continues pushing the market to ‘red’

TASI sheds 304 points as investors’ fears continues pushing the market to ‘red’

RIYADH: Saudi Arabia’s benchmark index slipped 304 points on Monday, as investors shied away from the market due to dampening business sentiments, inflationary pressures, and looming uncertainties surrounding the future of the global economy. 

The Tadawul All Share Index, known as TASI, was down 2.84 percent at 10,419 on Monday, while the parallel market Nomu shed 44 points or 2.98 percent to 1441. 

TASI slipped below 11,000 on Nov. 21 and has been hovering under that mark since then.

On Monday, of the 219 listed companies on TASI, 190 retreated, while 20 advanced. 

Etihad Atheeb Telecommunication Co. rose 2.88 percent to lead the gainers, followed by Saudi Industrial Investment Group and Theeb Rent a Car Co., whose share prices surged 2.09 percent and 1.60 percent respectively. 

Prior to the market opening Saudi Industrial Investment Group declared a 7.5 percent cash dividend, at SR0.75 ($0.20) per share, totaling SR566.1 million. 

Saudi Enaya Cooperative Insurance Co. led the fallers, as it was down 9.93 percent at the end of Monday’s trading session. 

Other top fallers were Saudi Arabia Refineries Co., Al-Rajhi Company for Cooperative Insurance, Riyad Bank, and Dr. Sulaiman Al Habib Medical Services Group. 

In the banking sector, Alinma Bank and Al Rajhi Bank fell 3.03 percent and 3.75 percent respectively. 

Saudi Aramco, one of the biggest energy producers in the world slipped 2.12 percent when the session closed on Monday. 

In the food and beverage sector, Almarai Co. went down 2.43 percent. 

Meanwhile, Jeddah-based Middle East Paper Co. announced it had restored the production capacity and operations of its plant in Al Khumrah on Dec. 1, ahead of the previously projected date to complete restoration works. 

Last week, MEPCO revealed the record rainfall in Jeddah had resulted in a stoppage of work at the plant on Nov. 24.

According to a statement, MEPCO incurred a decline in sales worth SR18 million, which equals to almost 7 percent of the projected figures for the fourth quarter. 

In another major development, Al-Saif Stores for Development & Investment Co., known as Alsaif Gallerym announced the successful completion of the book-building process for institutional investors, where the final offer price was set at SR115 per share, with a coverage ratio amounting to 1550 percent of the total offer shares. 


UAE In-Focus — UAE, Japan to set up joint business council; Dubai Future Labs signs 3 deals 

UAE In-Focus — UAE, Japan to set up joint business council; Dubai Future Labs signs 3 deals 
Updated 05 December 2022

UAE In-Focus — UAE, Japan to set up joint business council; Dubai Future Labs signs 3 deals 

UAE In-Focus — UAE, Japan to set up joint business council; Dubai Future Labs signs 3 deals 

RIYADH: In an effort to increase trade ties, the UAE and Japan agreed to set up a joint business council that will promote cooperation and facilitate greater movement of business communities between both countries.   

The Federation of UAE Chambers of Commerce and Industry, and Japan External Trade Organization in Dubai, also known as JETRO Dubai, signed an agreement to set up the proposed bilateral business council by the first quarter of 2023, the Emirates News Agency reported.

The council will work toward developing joint projects and exchanging the expertise of the two sides. 

This came during a meeting that brought together Humaid Mohammed bin Salem, secretary general of FCCI, and Masami Ando, managing director of JETRO Dubai, in the presence of officials from both sides. 

Bin Salem urged Japanese companies to invest in the UAE and take advantage of government incentives, as well as the favorable investment climate and legislation. He called on Emirati and Japanese businesses to explore business opportunities in the two countries and develop active partnerships to boost trade exchange. 

Dubai Future Labs signs 3 deals  

Dubai Future Labs, a part of Dubai Future Foundation, signed three agreements with Emirates, DP World, and dnata to deploy advanced future technologies across aviation and logistics – two vital non-oil sectors for Dubai and the UAE. 

These national partnerships aim to activate the Dubai Robotics and Automation Program that was launched last September to boost the development, testing and adoption of robotics and automation and accelerate its deployment in key economic sectors, WAM reported. 

Dubai Future Labs’ deal with DP World will include developing smart, autonomous electric vehicles for terminal operations that can serve as a more sustainable, reliable, efficient and safer alternative. 

Its agreement with Emirates work will facilitate various innovative pilot projects including a robot check-in agent that leverages facial recognition and interacts with passengers as well as a robot waiter serving in airport lounges.  

Whereas the deal between Dubai Future Labs and dnata will promote research, development and trial innovations to further improve safety, efficiency and sustainability across the company’s ground handling and cargo operations at Dubai International and Dubai World Central airports. 

Integrated platform for investment 

Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum approved the establishment of an integrated national platform that highlights opportunities for investors in various sectors, such as financial technology, tourism, manufacturing, and renewable energy.  

The platform will be supervised by the Ministry of Economy. 

He also approved the national building regulations and standards, which includes sustainability standards for roads, buildings, and housing, to decrease the consumption of natural resources and reduce the carbon footprint of the UAE. 

The UAE Cabinet meeting also approved the foreign investor compass project, which represents one of the transformative projects of the Ministry of Economy, WAM reported. 

The new project includes an electronic platform, guides and promotional tools that highlight various opportunities for foreign investors in the sectors of financial technology, agricultural technology, healthcare, education among others. 


Egypt’s output falls sharply amid inflationary pressure as PMI drops to 45.4: S&P Global

Egypt’s output falls sharply amid inflationary pressure as PMI drops to 45.4: S&P Global
Updated 05 December 2022

Egypt’s output falls sharply amid inflationary pressure as PMI drops to 45.4: S&P Global

Egypt’s output falls sharply amid inflationary pressure as PMI drops to 45.4: S&P Global

RIYADH: Egypt’s non-oil businesses witnessed a marked contraction in operating conditions in November, resulting in output falling at the sharpest rate since the early pandemic as the country continues to face inflationary pressure amid the weakening Egyptian pound, according to S&P Global. 

The impact of this was visible in Egypt’s Purchasing Managers’ Index which fell from 47.7 in October to 45.4 in November — the second lowest since June 2020, the report noted.

The rating agency said that the new low extends the current sub-50.0 sequence to two years.

The key reason for this downturn was a rapid decrease in business activity, with S&P research revealing that companies were forced to cut output as they faced accelerated cost rises. 

“Egyptian firms faced an immediate hit to demand from a rapid depreciation of the pound since late October, with the November PMI results signaling the worst drops in output and new orders since May 2020,” said David Owen, an economist at S&P Global Market Intelligence.  

He said the pound's depreciation against the US dollar led to a marked increase in prices paid for raw materials, which have already been exacerbated by import restrictions since early 2022.  

According to S&P Global, Egypt’s purchase price inflation hit a 52-month high, leading 42 percent of surveyed firms to report a rise in total input costs over the month. 

While new orders continued to fall rapidly for firms, Egypt saw employment levels still expanding for the fourth time in five months as business confidence recovered slightly from October's series low. 

But S&P said the rate of decline in new orders deepened in November, amid reports of spending cuts at customers due to rapid inflation and elevated interest rates. 

"The latest downturn also came in the midst of an emergency 2 percent hike in interest rates, amid continued efforts to bring inflation down from its current four-year high of 16.2 percent,” said Owen.  

While the latest FX move signals a further rise in inflation in November, he said it is hoped that slowing demand and falling commodity prices will start to alleviate price pressures in the medium- to long-term. 

Looking ahead, the report noted that Egyptian firms were slightly more optimistic about future output in November, albeit following a series record low in October. However, it added that concerns about high inflation, rising interest rates, currency weakness and a global economic slowdown remained dampeners on sentiment. 


Crown Prince announces Sindalah, NEOM’s first luxury island development

Crown Prince announces Sindalah, NEOM’s first luxury island development
Updated 05 December 2022

Crown Prince announces Sindalah, NEOM’s first luxury island development

Crown Prince announces Sindalah, NEOM’s first luxury island development
  • Sindalah is one of a group of islands that will be developed in the giga-project

RIYADH: NEOM’s first luxury island destination Sindalah will play host to superyachts and top-end apartments, Crown Prince Mohammed bin Salman revealed as he announced the latest project set to boost Saudi Arabia’s tourism industry.

Extending over an area of approximately 840,000sq. m., Sindalah is one of a group of islands that will be developed in the giga-project, and is expected to create 3,500 jobs for the tourism sector and hospitality and leisure services.

The island will act as a main gateway to the Red Sea, offering bespoke nautical experiences and is expected to start welcoming guests from early 2024, according to the Saudi Press Agency.

The Crown Prince said: “This is another significant moment for NEOM and a major step in the Kingdom realizing its tourism ambitions under Vision 2030. 

“Sindalah will be NEOM’s first luxury island and yacht club destination in the Red Sea, providing a scenic gateway to the Red Sea that will become the region’s most exciting and attractive tourism location. 

“It will be a destination where travelers can experience the true beauty of NEOM and Saudi Arabia, above and below the water, making Sindalah the future of luxury travel.”

 

 

Mohammed bin Salman, who is also the chairman of NEOM’s Board of Directors, said the launch of Sindalah is a major step in realizing the Kingdom’s tourism ambitions, in line with the goals outlined in Vision 2030.

Sindalah will have an 86-berth marina, as well as hosting 413 ultra-premium hotel rooms, in addition to 333 top-end serviced apartments. 

Other attractions in Sindalah include a luxe beach club, yacht club and 38 unique culinary offerings that will provide an incomparable experience in the Red Sea.

Sindalah is also expected to become a popular golfing destination by offering enthusiasts the opportunity to experience a world-class 6,474-yard (5,920 meters) par 70 course. With its 18 tees, the Sindalah golf course will deliver two unique nine-hole experiences.

NEOM, the $500 billion smart city, is one of the most important projects supporting Saudi Arabia’s national tourism strategy, as the Kingdom steadily diversifies its economy which was heavily dependent on oil for decades. 

In November, speaking at the World Travel and Tourism Council Global Summit, Nadhmi Al-Nasr, CEO of NEOM said that the hanging stadiums in the smart city will make tourists reimagine and visualize the future. 

“In The Line, we want people to come and see how sports stadiums are built, and where they are built. The sports stadiums in NEOM are 300 meter high, loose and hanging in the air,” said Al-Nasr.

He also added that OXAGON, the industrial city in NEOM also has all the potential to become a world-class tourist destination, where visitors can come and see how the future will be.

“It is in OXAGON where all industries will be, and it is the port of NEOM. Yet, we would like to see tourists spending a day or two in OXAGON. They will see the future of industries in OXAGON. Everything in NEOM is built for the future era. We want them to come and see how future sea ports will operate,” he added.