1 Saudi Arabia hints at another Opec cut in 2017 (San Francisco Chronicle) OPEC countries could cut oil production again this year, Saudi Arabia’s energy minister has said. Khalid Al-Falih said he “would not exclude” another cut to follow last year’s agreement if higher prices don’t stick because of variables outside producers’ control, such as a potential collapse in demand.
“I think Plan B is to be resilient and to be flexible and to deal with the circumstances,” he said. Asked if there could be further cuts, the minister said “if needed, absolutely.” However, he said his baseline expectation is that it “will not be necessary.”
OPEC agreed in late November to cut its production by 1.2 million barrels a day to 32.5 million barrels, the first reduction agreed to by the cartel since 2008. Nearly a dozen other countries, including Russia, pledged in December to cut an additional 558,000 barrels a day.
Those cuts are due to expire in June and Al-Falih said an extension is also possible. He warned that extending the cuts “could create a shortage too early which we don’t want to.” Oil prices are trading over $50 a barrel, nearly double the level they were a year ago, largely because of the production cuts.
The Paris-based International Energy Agency’s executive director, Fatih Birol, cautioned that the higher oil prices prompted by the production cuts could see a rise in output from US shale gas producers. And that newly increased supply could weigh on oil prices. “Don’t underestimate the shale gas reaction,” he said.
2 Theresa May sees inequality fueling divisive politics (BBC) Theresa May has told leaders at the World Economic Forum in Davos that the UK will be a “world leader” on trade. But the prime minister also warned that inequality blamed on globalisation was aiding the “politics of division”.
Her speech comes after EU leaders said a post-Brexit trade deal with the UK would be “difficult”. The European Commissioner for Economic Affairs, Pierre Moscovici, said Brexit would be bad for the UK and the EU. Mrs May said the world was enjoying an “unprecedented level of wealth”, but many people felt this was “not working for them”.
Global elites needed to tackle the backlash against globalisation, liberalism, and free trade because leaders who “embrace the politics of division and despair” were working to exploit the situation.
Mrs May said: “Talk of greater globalisation can make people fearful. For many it means their jobs outsourced and their wages undercut. It means having to sit back as they watch their communities change around them. And in their minds, it means watching as those who prosper seem to play by a different set of rules, while for many life remains a struggle as they get by, but don’t necessarily get on.”
3 Middle East debt issuance jumps to $78 billion (Issac John in Khaleej Times) Debt issuance in Middle East jumped to a record $77.8 billion in 2016 compared to 2015 as major economies in the region resorted to bond and sukuk market to tide over the challenges posed by the drop in oil revenue.
“Bolstered by Saudi Arabia’s $17.2 billion bond sale in October, Middle Eastern debt issuance reached $77.8 billion during 2016, a 145 per cent increase compared to the value raised during 2015 and by far the highest annual total in the region since records began in 1980,” said Nadim Najjar, managing director, Mena, Thomson Reuters.
Saudi Arabia was the most active nation in the Middle East accounting for 29 per cent of overall activity, followed by the UAE and Qatar.
International Islamic debt issuance increased 24 per cent year-on-year to reach $37.9 billion during 2016. HSBC took the top spot in the Middle Eastern bond ranking during 2016 with 13.3 per cent share of the market, while CIMB Group took the top spot for Islamic DCM issuance with a 13.5 per cent share.
The GCC countries, which together pump more than 18 million barrels per day of crude oil, suffered significant revenue shortfall in 2016. In 2015, total GCC total revenue, mainly from hydrocarbons, dropped to $443 billion, the lowest in five years, from a peak of $735 billion in 2013. In 2016, combined GCC revenue is estimated to have dropped further to $365 billion.