Oil Updates – prices turn higher as Middle East ceasefire hopes wane

Oil Updates – prices turn higher as Middle East ceasefire hopes wane
Brent crude futures rose 14 cents to $90.52 a barrel by 9:10 Saudi time. Shutterstock
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Updated 09 April 2024

Oil Updates – prices turn higher as Middle East ceasefire hopes wane

Oil Updates – prices turn higher as Middle East ceasefire hopes wane

BEIJING: Oil prices rose on Tuesday after hopes diminished that negotiations between Israel and Hamas would lead to a ceasefire in Gaza amid concerns the lingering conflict could potentially disrupt supply from the key Middle East producing region, according to Reuters.

Brent crude futures rose 14 cents to $90.52 a barrel by 9:10 Saudi time. US West Texas Intermediate crude was 10 cents higher at $86.53.

A fresh round of Israel-Hamas ceasefire discussions in Cairo had ended a multi-session rally on Monday, leading Brent to its first decline in five sessions and WTI to its first in seven on the prospect that geopolitical risks could ease.

But Israeli Prime Minister Benjamin Netanyahu said on Monday an unspecified date had been set for Israel’s invasion of the Rafah enclave in Gaza.

That is “ending the hopes that briefly gripped the market yesterday that geopolitical tensions in the region might be easing,” Tony Sycamore, a market analyst with IG, wrote in a note.

Hamas said early on Tuesday that Israel’s proposal it received from Qatari and Egyptian mediators did not meet any of the demands of Palestinian factions. But Hamas said it would study the proposal before responding to the mediators.

Without an end to the conflict, there is an elevated risk that it involves other countries in the region, especially Iran, a major Hamas backer and the third-largest producer in the Organization of the Petroleum Exporting Countries.

An Iranian response to Israel’s suspected attack last week on its consulate in Syria “could drag the oil market into the conflict, after being largely unimpacted since Hamas’s attack on Israel,” ANZ analysts said in a client note.

Tehran said that it would take revenge after an airstrike killed two of its generals and five military advisers in Damascus, although Israel has not claimed responsibility for the attack.

“The positive geopolitical risk premium is indeed supporting the current medium-term uptrend phase of oil,” said Kelvin Wong, a senior market analyst at OANDA in Singapore.

Broader fundamentals are supportive of prices as well, the ANZ analysts said. India’s fuel demand hit a record high in the 2024 fiscal year driven by higher gasoline and jet fuel consumption, data showed on Monday. An improvement in Chinese manufacturing activity announced last week is also expected to boost fuel demand.

This week, the market will be watching inflation data due from the US and China for further signals on the economic direction of the world’s top two oil consumers.

In the Americas, Mexico’s state oil company Pemex said it would reduce crude exports by 330,000 barrels per day so it can supply more to domestic refineries, cutting the supply available to the company’s US, European and Asian buyers by one-third. 

Saudi Manpower Solutions Co. eyes expansion following its public listing

Saudi Manpower Solutions Co. eyes expansion following its public listing
Updated 30 May 2024

Saudi Manpower Solutions Co. eyes expansion following its public listing

Saudi Manpower Solutions Co. eyes expansion following its public listing

RIYADH: Various sectors across different parts of Saudi Arabia will soon have greater and easy access to manpower as the country’s first service provider eyes expansion with its initial public offering.

Speaking to Arab News, Abdullah Al-Timyat, CEO of Saudi Manpower Solutions Co., known as SMASCO, said the IPO will help propel SMASCO within the Saudi market, drive growth initiatives, and fortify its presence and stakeholders’ trust.

Al-Timyat said the IPO proceeds will not be utilized for internal operations but will be earmarked for strategic growth initiatives to expand the company’s footprint across the Kingdom’s diverse market. 

He added the company’s capital-light model, fortified by no debt and robust cash management, positions it for agile expansion. “We have zero debt and funding. We have strong cash management, and we have enough internal funds for our operations. So, the IPO will enable SMASCO in its future steps and strategic direction in expanding within the Saudi market, reaching new geographic cities and regions within Saudi Arabia.”

With an eye on deepening market penetration, Al-Timyat outlined SMASCO’s strategic direction, leveraging the IPO’s support to enhance brand awareness and stakeholders’ trust.

“We will even go deeper … within specific sectors, in business industry and professional manpower, depending on a more trusted bond that we have available because of the IPO and the support that we will have.”

The executive outlined the company’s current focus on the Kingdom’s market, emphasizing its vast potential and opportunities for manpower companies, including SMASCO.

He also underscored the entity’s mature model and expertise in technologies, which position it to potentially expand into new markets in the future. While there are no immediate plans to venture beyond Saudi Arabia, SMASCO remains prepared to seize opportunities should they arise, he said.

Looking ahead, the CEO highlighted artificial intelligence’s transformative potential emphasizing its role in enhancing efficiency and service delivery. 

He said: “AI and advanced technology is an opportunity for manpower companies. This is how we see it in SMASCO, this will provide us more opportunities, a faster a road to (achieve) our objectives operationally, financially and even for our customers.”

Al-Timyat highlighted the pivotal role of Vision 2030 benchmarks in providing clarity and direction to SMASCO’s future endeavors.

“Since the government launched Vision 2030, we have a clarity where we are going and this makes it easier for any industry, for any investor. We see a persistence of execution by the government, which we have never witnessed before and this is actually aligned with what we are seeing.”

This synergy between technological innovation and national objectives supports industry advancement. The executive noted that it is set to drive economic growth and societal development in alignment with the Kingdom’s ambitious vision.

Al-Timyat also outlined the global demand for various industries, including medical, logistics, tourism, and entertainment, which are also prevalent in Saudi Arabia.

Each of these industries requires specific qualities for talents and specialized manpower services to address their unique needs, he noted.

The executive said SMASCO, specialized in manpower solutions, has created subsectors within its team to cater to diverse industries.

This focus on specialization enables SMASCO to provide high-quality services that align with the economy, market trends, and specific requirements of each industry.

Saudi banks’ risk profiles stronger than GCC counterparts: Fitch 

Saudi banks’ risk profiles stronger than GCC counterparts: Fitch 
Updated 30 May 2024

Saudi banks’ risk profiles stronger than GCC counterparts: Fitch 

Saudi banks’ risk profiles stronger than GCC counterparts: Fitch 

RIYADH: Saudi banks exceed their Gulf Cooperation Council counterparts in terms of risk profiles underpinning their asset quality, according to Fitch Ratings.

The credit rating agency said in a statement that there is a strong correlation between asset quality and risk profile scores among regional banks, particularly in the GCC, due to their lending-focused business models. Saudi banks boast a weighted-average risk-profile score slightly below “bbb+” and a similar asset quality score.

Conversely, in the UAE, Qatar, and Kuwait, both weighted-average scores stand two notches lower, at “bbb-.”

Despite experiencing credit growth around double the GCC average between 2022 and 2023, Saudi banks maintain stronger scores. This surge is attributed to heightened government spending and robust non-oil gross domestic product growth.

However, banking assets remained at 99 percent of GDP by the end of 2023, contrasting with figures of 206 percent in the UAE, 240 percent in Qatar, and 159 percent in Kuwait.

The stronger risk profiles of Saudi banks are evident in their asset quality metrics. From 2019 to 2023, the sector’s cost of risk averaged 60 basis points, lower than the averages observed in the UAE, Qatari, and Kuwaiti banking sectors.

Similarly, the combined Stage 2 and 3 loans ratio of 7.2 percent was the lowest among the four markets.

Fitch’s assessment of Saudi banks’ stronger risk profiles reflects their generally conservative underwriting standards and risk controls.

This evaluation also acknowledges the perception that the Saudi Central Bank,  also known as SAMA, is the region’s strictest and most prudent banking regulator.

“Saudi banks have less borrower concentration than the UAE and Qatari banks, but a similar level to Kuwaiti banks, due to a larger and more diversified economy and strong retail financing in 2021-2023,” the rating agency stated.

It added: “The 20 largest exposures at Saudi and Kuwaiti banks account for about 20 percent of the loan books on average, but significantly more — about 35 percent — at UAE and Qatari banks.”          

Moreover, Saudi banks extend lower levels of financing to companies owned or managed by high-net-worth individuals compared to certain UAE and Qatari banks.

Saudi banks’ exposure to real estate and construction companies rose to 15 percent of gross sector financing by the end of the first quarter of 2024, up from 12 percent at the end of 2021.

This trend is anticipated to persist as non-oil sectors continue to expand. While Saudi banks’ real estate financing proportion now resembles that of Qatari and the UAE banks, it remains below the average for Kuwaiti lenders, standing at 24 percent of gross loans as of end 2023.

“We typically view high exposure to real estate financing as a weakness for GCC banks’ risk profiles and asset quality, as the exposures are mostly long-term and often non-amortizing with final repayment contingent upon full completion of the building,” Fitch said in the statement.

It added: “Potential difficulty in realizing underlying collateral or repossessing prime residences can also weigh on how Fitch views the exposures.”



Riyadh residential market sales surge 77%: CBRE report

Riyadh residential market sales surge 77%: CBRE report
Updated 30 May 2024

Riyadh residential market sales surge 77%: CBRE report

Riyadh residential market sales surge 77%: CBRE report

RIYADH: Saudi Arabia’s residential market experienced robust growth in demand, with Riyadh witnessing a 77 percent year-on-year increase in sales transactions in the first quarter, a new report showed. 

According to global consultancy firm CBRE, Jeddah residential transactions surged by 92.9 percent in the first three months of this year, while Dammam saw a 28.0 percent increase year-over-year. 

Taimur Khan, head of research MENA, said: “Whilst we have seen strong performance across commercial sectors within Saudi Arabia in the recent past, something which continues to date, we are now beginning to see the residential sector also register a significant surge in demand. This is, in turn, underpinning performance in the sector.” 

As new stock continues to be delivered, he said they expect this trend to continue, with demand outpacing supply for some time to come. 

“However, we also expect that there might be some bifurcation in performance within the residential sector, with new quality assets likely to register record rates,” added Khan.

Villa prices in Riyadh, Jeddah, and Khobar rose by 3.6 percent, 0.2 percent, and 3.1 percent, respectively. Meanwhile, Dammam saw a slight decline of 0.5 percent. 

In the apartment segment, prices in Riyadh, Dammam, and Khobar increased by 8.4 percent, 0.9 percent, and 0.4 percent, respectively, compared to the previous year.  

However, Jeddah experienced a 1.1 percent decrease in average apartment prices over the same period.   

Throughout the first quarter of this year, the office sector witnessed a slowdown in rental growth across all market segments.  

Prime rents in Riyadh’s occupier market surged by 14.5 percent, while Grade A and Grade B rents increased by 11.8 percent and 10.3 percent, respectively.  

In Dammam, Grade A rents rose by 8.0 percent, Grade B by 6.2 percent, and Khobar’s Grade A rents saw a 4.6 percent increase.  

Occupancy rates stood at 93.8 percent, 99.7 percent, and 99.4 percent for Prime, Grade A, and Grade B segments in Riyadh, while Dammam and Khobar displayed respective Grade A occupancy rates of 86.3 percent and 85.2 percent as of the first quarter.  

In Jeddah, Grade A and Grade B rents increased by 13.6 percent and 13.1 percent, respectively, with occupancy rates reaching 92.5 percent and 86.6 percent. 

The hospitality sector’s performance remained strong throughout the first quarter due to high visitation levels.  

Year-on-year, from January to March 2024, the average occupancy rate saw a slight uptick of 0.1 percentage points.  

Additionally, the country experienced an 11.8 percent increase in average daily rate, leading to a 12.0 percent rise in revenue per available room.

Closing Bell: TASI dips to close at 11,503 points

Closing Bell: TASI dips to close at 11,503 points
Updated 30 May 2024

Closing Bell: TASI dips to close at 11,503 points

Closing Bell: TASI dips to close at 11,503 points

RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Thursday, losing 193.02 points, or 1.65 percent to close at 11,503.49

The total trading turnover of the benchmark index was SR13.13 billion ($3.50 billion) as 65 stocks advanced while 161 retreated.   

Similarly, the MSCI Tadawul Index dipped by 24.77 points, or 1.70 percent, to close at 1,436.07.

However, the Kingdom’s parallel market, Nomu, increased by 307.64 points or 1.17 percent, to close at 26,610.57. This comes as 28 stocks advanced, while as many as 30 retreated. 

The best-performing stock was the Mediterranean and Gulf Insurance and Reinsurance Co., as its share price surged by 7.66 percent to SR29.50.

Other top performers included Almasane Alkobra Mining Co. and Alkhorayef Water and Power Technologies Co., whose share prices soared by 5.37 percent and 4.55 percent, to stand at SR62.80 and SR161 respectively.

National Co. for Learning and Education and East Pipes Integrated Co. for Industry also performed well.

The worst performer was ACWA Power Co. whose share price dropped by 9.98 percent to SR402.40.

Share prices of Fawaz Abdulaziz Alhokair Co. as well as the Co. for Cooperative Insurance dropped by 7.89 percent and 6.41 percent to stand at SR8.40 and SR131.40, respectively.

The best-performing stock of the day on the parallel market was Mohammed Hadi Al-Rasheed and Partners Co., as its share price surged by 12.58 percent to SR34.90.

Other top performers included Osool and Bakheet Investment Co. and Abdulaziz and Mansour Ibrahim Albabtin Co., whose share prices soared by 12.38 percent and 6.86 percent, to stand at SR44.95 and SR45.95 respectively.

Aramco sets butane, propane prices for June

Aramco sets butane, propane prices for June
Updated 30 May 2024

Aramco sets butane, propane prices for June

Aramco sets butane, propane prices for June

RIYADH: Saudi Aramco maintained propane contract prices for June month on month at $580 per tonne while price for butane was set at $565 a tonne.

Propane and butane are types of liquefied petroleum gas with different boiling points.

LPG is mainly used as a fuel for cars, heating and as a feedstock for other petrochemicals.

Aramco’s OSPs for LPG are used as a reference for contracts to supply the product from the Middle East to the Asia-Pacific region.

China is the world's largest consumer and importer of LPG, or combination of propane and butane.

China’s imports of LPG jumped about 46 percent to 3.08 million metric tons in March from February.