Dollar peg remains Saudi Arabia’s best option

November 27, 2015

Saudi Arabia is under pressure to break its currency peg with the dollar. The inflexible riyal means Saudi can’t devalue to offset weak oil prices. But given Riyadh’s huge forex reserves, the risks of moving to a floating currency still outweigh the rewards.

Oil market rests on Saudi-Iranian output deal

November 24, 2015

Saudi Arabia says it will work with the world’s biggest oil producers to maintain price stability. To be effective, the OPEC kingpin will also have to make room for Iran to add barrels to the flooded market. The geopolitics are fast moving. But logic points to a deal.

Energy subsidies will test Saudi’s pain threshold

October 29, 2015

The kingdom is considering how to claw back the $107 bln it foregoes each year by subsidising the price of domestic energy. Without that support, companies would be uncompetitive and subjects angry. But the impact of low oil prices makes giveaways an unaffordable luxury.

Oil price floor could be a long way down

By Edward Hadas
January 13, 2015

Petro-economics are painfully simple for producers. Lower prices hardly push up demand. And it will take a price below $30 a barrel before supply falls enough to balance the market. Unless producers can regroup into an effective cartel, their suffering will continue.

Jumbo $6 bln bank IPO shows Saudi too big to miss

October 7, 2014

The sale of shares in the kingdom’s top bank will be the largest this year after Alibaba. A few foreign investors may share some of the upside. For most, it’s a reminder of the opportunities on offer when the $584 bln market opens more fully to outsiders next year.

Iraq troubles are unlikely to bring new oil crisis

June 24, 2014

The continued violence looks like a harbinger of a sharp cutback from one of the world’s major oil producers. But the bulk of Iraq’s production is still secure. The Middle East is clearly becoming less stable, but it would take a cascade of problems to create a big price shock.

Crude reasons support Saudi stocks

March 20, 2012

Foreign investors are sweet on Saudi. Growing excitement over a mooted easing of ownership restrictions led overseas buyers to make record net purchases in the $400 bln stock market last month. But in a market known to disappoint, it’s worth paying close attention to the risks.

Saudi words won’t ease pressure on U.S. fuel prices

March 21, 2012

Despite its reassurances, Saudi Arabia has imperfect options to prevent U.S. fuel prices from reaching risky levels seven months before the presidential elections. Sanctions on Iran, meanwhile, allow Riyadh to benefit from both strong oil prices and high production.

Saudis wouldn’t gain much from a union with Bahrain

May 2, 2012

The house of Saud’s call for Gulf states to move beyond cooperation and combine into a single entity lays the ground for forming a union with the troubled island. Yet Saudi already bankrolls Bahrain and underwrites its security. The benefits of further integration are dubious.

Saudi’s foreign aid bill piles up

May 28, 2012

Egypt, Jordan, Bahrain, Oman and Yemen: the Arab Spring has increased the kingdom’s spending to prevent unrest and boost influence. At the current oil price, the Saudis can easily afford to be generous, but today’s emergency gifts could become tomorrow’s permanent liabilities.