DUBAI/BAGHDAD/LONDON: A debate within Iraq over whether it should ask to be exempt from OPEC+ oil supply cuts has resurfaced as low prices squeeze its finances, challenging a government struggling to tackle the destruction of years of war and rampant corruption.
OPEC’s second-biggest producer, Iraq has failed in the past to fully comply with OPEC+ oil output reductions, pumping above its production targets since the pact was first signed in 2016 between OPEC and its allies led by Russia.
“Iraq always believed they were not properly treated in December 2016 when they were not exempted. As the economy continues to reel from low prices this issue keeps resurfacing,” said an OPEC source.
Iraq’s economy and oil sector were battered by years of wars, sanctions and a stubborn Islamist insurgency triggered by the US invasion. Baghdad complained it had struggled to revive its stagnating oil industry, at a time where other OPEC members benefited and boosted their market share.
Iraq relies on oil to fund 97% of its state budget. Iraqi Finance Minister Ali Allawi told parliament on Wednesday that reforming Iraq’s economy would take five years of work and that state debt amounted to 80-90% of national product, while foreign debt was at $133 billion.
From May 1, the Organization of the Petroleum Exporting Countries and allies, a grouping known as OPEC+, made a record cut of 9.7 million bpd, or 10% of global output, after the coronaries destroyed a third of world demand. From Aug. 1, the cut tapered to 7.7 million bpd until December.
Iraqi politicians have criticized the pact which was signed by the previous caretaker government under which Baghdad had committed to a big cut in its output.
With oil prices currently trading at around $40 a barrel, opposition to the oil cuts is rising behind closed doors and talks of reviving old calls to review the size of the reductions have resurfaced, Iraq and OPEC sources told Reuters.
A senior Iraqi official with knowledge of the talks said there were differing views between the oil ministry and the prime minister’s office over whether to fully comply with the cuts or ask for an exemption for next year.
The oil ministry wants to ask for an exemption, the official, who declined to be identified, said, while officials in the prime minister’s office insist on compliance.
The disagreement revolves around Iraq’s current financial issues, the official added.
In May and June, Iraq had agreed to reduce its crude output by just over 1 million barrel per day, which would then ease to 849,000 bpd from July until end of the year.
Iraq has continued as a member of the deal but has overproduced above its quota.
But now Iraq needs to fully comply with the agreed output targets and even compensate for its previous overproduction in May-July by cutting deeper for the following months.
“There is strong opposition ... for their (Iraq’s) continued participation in the supply cuts,” the OPEC source said, adding that there has been unofficial talk about Baghdad’s need to seek an exemption from the oil cuts in 2021 but it was not clear whether Iraq would actually take that step or not.
In August, Iraq has reached its highest compliance in recent years but it has said it may need to extend the compensation period by two months.
Current Prime Minister Mustafa Al-Kadhimi took office in May, becoming the third Iraqi head of government in a chaotic 10-week period that followed months of deadly protests in the country, which has been exhausted by decades of sanctions, war, corruption and economic challenges.
Iraq’s oil ministry spokesman said last week that Baghdad remained fully committed to the OPEC+ oil supply cut agreement, denying a media report that it was seeking an exemption from the reduction pact during the first quarter of 2021.
In June, Iraq has said it asked OPEC to take into consideration the members’ economic situation in sharing the burden of future oil cuts.
The World Bank estimates Iraq’s economy will shrink 9.7% in 2020 on back of lower oil prices and coronavirus, compared to 4.4% growth in 2019.
With a battered economy, Iraq debates its contribution to OPEC+ oil cuts
https://arab.news/8gygc
With a battered economy, Iraq debates its contribution to OPEC+ oil cuts
- Iraq’s economy and oil sector were battered by years of wars, sanctions and a stubborn Islamist insurgency triggered by the US invasion
- In May and June, Iraq had agreed to reduce its crude output by just over 1 million barrel per day, which would then ease to 849,000 bpd from July until end of the year.
Closing Bell: Saudi main index closes in green at 11,725
RIYADH: Saudi Arabia’s Tadawul All Share Index gained 20.95 points, or 0.18 percent, closing at 11,725.88 on Thursday. The total trading volume for the benchmark index reached SR6.20 billion ($1.65 billion), with 141 stocks advancing and 94 declining.
The MSCI Tadawul Index also saw an increase, rising by 2.36 points, or 0.16 percent, to close at 1,479.27.
In contrast, the Kingdom’s parallel market, Nomu, slipped by 37.56 points, or 0.12 percent, closing at 31,135.85. This decline came as 54 stocks rose, while 29 saw a decrease.
The top-performing stock of the day was Rasan Information Technology Co., which saw its share price surge by 9.87 percent to SR79.
Other strong performers included Saudi Chemical Co., whose share price climbed by 5.89 percent to SR8.45, and Saudi Research and Media Group, which gained 5.66 percent, reaching SR175.60.
On the other hand, Nice One Beauty Digital Marketing Co. was the worst performer, with its share price dropping by 4.99 percent to SR40.90.
National Shipping Co. of Saudi Arabia and Alandalus Property Co. also faced declines, with their shares falling by 4.29 percent and 3.55 percent, respectively, to SR29 and SR23.90.
On the announcements front, First Milling Co. reported a net profit of SR250.9 million for 2024, marking a 13.9 percent increase compared to the previous year.
The company attributed this growth to higher sales, improved product mixes and pricing, as well as the introduction of new products.
Additionally, continued growth in small-pack goods, which offer higher profit margins, alongside efficiency improvements, cost leadership, and enhanced cash management, contributed to the rise, with increased interest income from Shariah-compliant Murabaha deposits.
Despite the positive results, First Milling Co.’s share price remained unchanged at SR60.90 during today’s trading.
Umm Al-Qura Cement Co. also reported impressive results, with a net profit of SR47.7 million for 2024, a staggering 1,107 percent increase from the previous year’s SR3.9 million.
This growth was driven by higher sales volumes and values, as well as reductions in administrative expenses, financing costs, and zakat. Despite the strong performance, the company’s shares fell by 1.98 percent, closing at SR18.78.
Lastly, ADES Holding Co. announced that it had received a Shariah Evaluation Report confirming its compliance with Islamic guidelines for the year ending Dec. 31.
The report, issued by the Shariyah Review Bureau, affirmed that the company’s activities aligned with Shariah standards. ADES Holding’s shares closed 0.74 percent lower on the main market at SR16.10.
Saudi money supply up 9% to hit $791bn in January
RIYADH: Saudi Arabia’s money supply climbed to SR2.97 trillion ($791 billion) in January, marking a 9 percent annual rise, official data showed.
According to figures from the Saudi Central Bank, known as SAMA, demand deposits accounted for 48.75 percent of the total, reaching SR1.45 trillion. While still below the April 2021 peak of 60.21 percent, they edged up from 48.42 percent a year ago, reflecting shifting monetary conditions.
Demand deposits are a crucial part of the money supply. When individuals deposit money into checking accounts, it increases the total amount of demand deposits, thereby expanding the overall money supply in the economy.
A demand deposit refers to money held in a bank account that can be withdrawn at any time, whenever the account holder requires it.
These funds are generally used for everyday expenses. Banks or financial institutions typically offer little to no interest on the balance in a demand deposit account.
Time and savings deposits — which surged during the US Federal Reserve’s aggressive rate hikes, mirrored by Saudi Arabia due to the riyal’s peg to the US dollar — reached SR985.03 billion in January, accounting for 33.21 percent of total deposits.
As the Fed began easing monetary policy in September, lowering interest rates from their 6 percent peak to 5 percent by December, time deposits started to decline from their 33.61 percent high in November.
This shift reflects a gradual return to shorter-term deposit preferences as rate-sensitive accounts adjust to a lower-yield environment.
The third-largest category, other quasi-money deposits — including residents’ foreign currency accounts, marginal deposits for letters of credit, outstanding remittances, and bank repo transactions with the private sector — stood at SR301.28 billion, making up 10.16 percent of total deposits. Currency outside banks totaled SR233.71 billion.
Over the past two years, the Fed’s aggressive rate hikes aimed at curbing inflation led to a rise in term deposits as customers sought higher-yielding accounts, but with benchmark rates now easing, demand deposits have started to regain share.
Despite the 9 percent annual rise in money supply, deposit growth continues to lag behind bank lending, which surged 14.66 percent during the same period to exceed SR3 trillion for the first time. This growth has been driven by corporate credit expansion, particularly in real estate, infrastructure, and other key Vision 2030 sectors.
As deposit inflows moderate, Saudi banks have increasingly turned to external borrowing to bridge funding gaps. Recent issuances of euro-denominated bonds highlight the evolving financing landscape, with the debt capital market playing an increasingly pivotal role.
Speaking at the Capital Markets Forum 2025 in Riyadh in February, Mohammad Al-Faadhel, assistant deputy of financing at the Capital Market Authority, highlighted how Vision 2030 has transformed Saudi Arabia from a capital exporter to a credit-driven market, accelerating debt market growth.
Al-Faadhel noted that the Sukuk and Development Capital Market Committee was established in collaboration with key stakeholders to remove obstacles and support market expansion.
With ongoing structural reforms, Saudi Arabia’s financial ecosystem is evolving rapidly, setting the stage for continued growth in capital markets, corporate lending, and alternative financing mechanisms under Vision 2030.
Loan-to-deposit ratio holds steady
Saudi Arabia’s loan-to-deposit ratio rose to 82.78 percent in January, up from 80.05 percent in the same month last year, yet slightly lower than December’s 83.24 percent, according to SAMA data.
The LDR, a key banking metric, measures the proportion of loans issued by banks relative to their total deposits, indicating liquidity levels and lending capacity.
The increase over the past year reflects strong credit demand, particularly from corporate borrowers in key Vision 2030 sectors such as real estate, infrastructure, and industrial expansion.
However, the slight month-on-month decline suggests a stabilization in lending activity, as banks balance loan issuance with available deposit inflows. Despite the surge in credit, the LDR remains well below the regulatory cap of 90 percent, ensuring ample liquidity and financial stability within the banking system.
This ratio is closely monitored by regulators and investors as it influences banks’ ability to extend new loans while maintaining a healthy funding base.
BSF, Diriyah Co. ink $1.6bn financing deal to develop Wadi Safar project
JEDDAH: Banque Saudi Fransi has signed a financing deal worth SR6 billion ($1.6 billion) with Diriyah Co. to develop the Wadi Safar project, highlighting the private sector’s role in driving economic growth.
The development is a key cultural and tourism destination within the larger Diriyah area, which aims to attract over 50 million visitors by 2030 while supporting major initiatives, according to the bank, which rebranded as BSF in June after 48 years in the market.
During the signing ceremony, Bader Al-Salloom, CEO of BSF, and Jerry Inzerillo, CEO of Diriyah Co., emphasized the importance of this partnership in achieving sustainable development and enhancing Diriyah’s position as a prominent cultural and historical hub.
The agreement between the two parties aligns with Saudi Vision 2030’s goal of transforming the Kingdom into a global tourist destination. The Diriyah Gate Development Authority has set a precedent by blending respect for heritage with innovative, sustainable ventures, such as Al-Bujairi Terrace, which has become a major tourist attraction since its opening in 2022.
The deal is also part of BSF’s initiatives to back significant development projects that boost infrastructure, promote tourism, and drive economic growth in Saudi Arabia, the bank said in a statement.
The Wadi Safar project, introduced in December 2023 by the DGDA, is one of the three main initiatives under the Diriyah Co’s development plan.
It covers an area of approximately 62 sq. km and is set to become an upscale residential community, including high-end hospitality facilities, recreational and sports venues, and advanced commercial and retail spaces.
The project will offer premium real estate units designed to cater to the needs of both investors and visitors. Moreover, Wadi Safar’s gated community will serve as an oasis within Riyadh, featuring three major resorts: Six Senses, Aman, and Oberoi.
It is also the location for the ongoing development of the Greg Norman-designed championship signature golf course and Royal Diriyah Golf Club.
The Diriyah development project aims to generate around 178,000 job opportunities and is expected to contribute SR18.6 billion to the Kingdom’s gross domestic product upon completion.
UAE joins dividend surge as global payouts hit record $1.75tn in 2024
RIYADH: The UAE was among 17 countries setting new dividend records in 2024 as global payouts surged to a record $1.75 trillion, marking a 6.6 percent increase from the previous year, a new report showed.
According to research by trading platform eToro, UAE-listed companies maintained steady dividend distributions, driven by strong performances in the banking, energy, and real estate sectors.
This comes as Saudi-listed companies also made significant dividend moves in 2024, with energy firm Aramco declaring a total payout of $85.4 billion despite a drop in net profit, while Al Rajhi Bank’s total shareholder payments reached SR10.84 billion ($2.89 billion), combining a first-half cash dividend of SR5 billion and a second-half payout of SR5.84 billion.
“The financial sector has been a standout performer, with UAE banks benefiting from higher interest rates and economic expansion. Abu Dhabi Islamic Bank, for instance, raised its dividend payout to 50 percent of its annual profit, reflecting the sector’s robust earnings growth,” said Josh Gilbert, a market analyst at eToro.
Energy companies also played a significant role, with ADNOC Gas announcing a $3.41 billion dividend, supported by high oil prices and a commitment to 5 percent annual dividend growth.
In the real estate sector, Emaar Properties doubled its dividend to 8.8 billion dirhams ($2.4 billion), backed by record property sales and strong market demand.
For income-focused investors, dividends remain a core element of long-term strategies, providing consistent cash flow and potential for compounding returns.
“While 2024 saw record dividend distributions, certain increases, such as Emaar’s 100 percent payout of its share capital, may not be repeated annually. These sectors are cyclical, and dividends could fluctuate with market conditions,” Gilbert added.
Despite concerns about sustainability, UAE companies’ focus on shareholder returns highlights the market’s resilience. The country’s dividend growth outlook remains positive, supported by strong corporate earnings, favorable government policies, and continued investor interest.
Whether targeting high yields or steady income, the UAE remains an attractive market for global investors.
Lebanon readies 22 deals for signing with Saudi Arabia during high-level visit
RIYADH: Lebanon has prepared the final drafts of 22 cooperation agreements with Saudi Arabia, setting the stage for a high-level visit next month to strengthen economic ties.
The delegation could be led by President Joseph Aoun, Prime Minister Nawaf Salam, or both, according to Lebanese Deputy Prime Minister Tarek Mitri in an interview with Asharq.
This comes as Saudi Crown Prince Mohammed bin Salman hosted President Aoun at the Royal Court in Al-Yamamah Palace on March 3 — Aoun’s first foreign visit since taking office — where they discussed Lebanon’s ongoing crisis and regional developments.
The agreements, covering sectors from agriculture to intellectual property, are seen as crucial to securing broader international aid for Lebanon’s struggling economy.
“This is a legitimate approach, and we must earn the trust of Arab nations and the international community,” Mitri said, emphasizing that Saudi Arabia’s support is vital for unlocking further international aid. He confirmed that the 22 agreements are fully drafted and ready for signing.
On his arrival, Aoun had expressed hope that his talks with the crown prince would pave the way for a follow-up visit to sign agreements aimed at strengthening cooperation between the two nations.
The deals cover a wide range of sectors, including intellectual property, consumer protection, and environmental management, as well as agriculture and water resources, Rabih El-Amine, chairman of the Lebanese Executives Council, told Arab News earlier this month.
El-Amine also pointed to agreements involving the Ministry of Information, the General Directorate of Civil Aviation, and Banque du Liban.
Mitri further revealed that Lebanon is working on an independent fund — separate from government institutions handling refugee affairs — in partnership with international organizations to oversee post-war reconstruction efforts. This move aims to boost credibility with donors, especially in the wake of the recent Hezbollah-Israeli conflict.
A World Bank report commissioned by the Lebanese government estimates the country needs roughly $11 billion for recovery and reconstruction. The report assessed damage across 10 key sectors, projecting infrastructure repairs at $3 billion to $5 billion in public sector funding, while housing, trade, industry, and tourism would require $6 billion to $8 billion in private investments.
Mitri also noted that France has expressed willingness to host a conference to support Lebanon’s recovery. French officials have proposed preparatory meetings or merging them into a single event, though no date has been set. The conference would prioritize humanitarian aid and reconstruction, while a separate investment-focused event aims to attract international figures.
