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.
Abu Dhabi’s ADQ lists debut $2.5bn bonds on London Stock Exchange
The smallest of three Abu Dhabi sovereign wealth funds ADQ has listed a dual tranche $2.5 billion bond on the London Stock Exchange, the fund said in a statement.
The fund sold a $1.25 billion five-year portion at 80 basis points over US Treasuries and another $1.25 billion 10-year tranche at 90 bps over the same benchmark, fixed income news service IFR reported.
Citigroup, Credit Agricole, First Abu Dhabi Bank, Goldman Sachs International, HSBC and Standard Chartered were joint global coordinators and active bookrunners on the bond issuance deal.
The proceeds from the debt sale, which was oversubscribed more than 4.4 times, will diversify ADQ’s funding mix, enhance financial resilience and contribute growth capital.
US Fed leaves rates unchanged, flags ‘lack of further progress’ on inflation
- Policy rate remains in 5.25 percent-5.50 percent range
- Fed policymakers concerned by recent inflation data
- Markets take ‘dovish’ view of Fed chief’s remarks
WASHINGTON : The US Federal Reserve held interest rates steady on Wednesday and signaled it is still leaning toward eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings that could make those rate cuts a while in coming, Reuters reported.
Indeed, Fed Chair Jerome Powell said that after starting 2024 with three months of faster-than-expected price increases, it “will take longer than previously expected” for policymakers to become comfortable that inflation will resume the decline toward 2 percent that had cheered them through much of last year.
That steady progress has stalled for now, and while Powell said rate increases remained unlikely, he set the stage for a potentially extended hold of the benchmark policy rate in the 5.25 percent-5.5 percent range that has been in place since July.
US central bankers still believe the current policy rate is putting enough pressure on economic activity to bring inflation under control, Powell said, and they would be content to wait as long as needed for that to become apparent — even if inflation is simply “moving sideways” in the meantime.
The Fed’s preferred inflation measure — the personal consumption expenditures price index — increased at a 2.7 percent annual rate in March, an acceleration from the prior month.
“Inflation is still too high,” Powell said in a press conference after the end of the Federal Open Market Committee’s two-day policy meeting. “Further progress in bringing it down is not assured and the path forward is uncertain.”
Powell said his forecast remained for inflation to fall over the course of the year, but that “my confidence in that is lower than it was.”
Whether there are rate cuts this year or not remains in doubt.
“If we did have a path where inflation proves more persistent than expected, and where the labor market remains strong but inflation is moving sideways and we’re not gaining greater confidence, well, that would be a case in which it could be appropriate to hold off on rate cuts,” Powell said. “There are paths to not cutting and there are paths to cutting. It’s really going to depend on the data.”
Despite the uncertainty of the current economic moment, Powell’s characterization of rate hikes as “unlikely” cheered investors concerned about a newly hawkish Fed chief.
US stock and bond prices turned higher as Powell preached patience that may delay rate cuts, but also means a high bar for any more hikes. The Fed raised its benchmark policy rate by 5.25 percentage points in 2022 and 2023 to curb a surge in inflation.
Powell’s remarks on Wednesday were “notably less hawkish than many feared,” said analysts at Evercore ISI. “The basic message was that cuts have been delayed, not derailed.”
Investors in contracts tied to the Fed’s policy rate increased bets that rate cuts could begin in September rather than later in the year as reflected in earlier market pricing.
Balance Sheet
The Fed’s latest policy statement kept key elements of its economic assessment and policy guidance intact, noting that “inflation has eased” over the past year, and framing its discussion of interest rates around the conditions under which borrowing costs can be lowered.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the Fed repeated in its unanimously-approved statement.
That continues to leave the timing of any rate cut in doubt, and Fed officials made emphatic their concern that the first months of 2024 have done little to help the cause.
“In recent months, there has been a lack of further progress toward the Committee’s 2 percent inflation objective,” the Fed said in its statement.
The US central bank also announced it will scale back the pace at which it is shrinking its balance sheet starting on June 1, allowing only $25 billion in Treasury bonds to run off each month versus the current $60 billion. Mortgage-backed securities will continue to run off by up to $35 billion monthly.
The step is meant to ensure the financial system does not run short of reserves, as happened in 2019 during the Fed’s last round of “quantitative tightening.”
While the move could loosen financial conditions at the margin at a time when the US central bank is trying to keep pressure on the economy, policymakers insist their balance sheet and interest rate tools serve different ends.
The Fed maintained its overall assessment of economic growth, saying that the economy “continued to expand at a solid pace. Job gains have remained strong and the unemployment rate has remained low.”
Powell reconciled that with the relatively weak, 1.6 percent growth of gross domestic product in the first quarter by saying that the 3.1 percent increase in private domestic demand was a better gauge of where the economy stands, with output buttressed by a recent jump in immigration.
Asked about the risk the US was entering a period of “stagflation” with stagnant growth and rising prices, Powell said current conditions are nothing like those seen in the late 1970s when prices were rising more than 10 percent annually at one point alongside high unemployment.
“Right now we have ... pretty solid growth ... We have inflation running under 3 percent,” Powell said, adding: “I don’t see the ‘stag’ and I don’t see the ‘flation,.’”
Oil Updates - prices rebound on hopes US will replenish strategic reserve
NEW DELHI: Oil prices rose on Thursday, rebounding from three days of losses, on expectations the lower levels may prompt the US, the world’s biggest crude consumer, to start replenishing its strategic reserve, putting a floor under prices, according to Reuters.
Still, prices fell more than 3 percent on Wednesday to a seven-week after the US Federal Reserve kept interest rates steady, which may curtail economic growth this year and limit oil demand increases.
Crude was also pressured by an unexpected increase in US crude inventories and signs of an impending Israel-Hamas ceasefire that would ease Middle East supply concerns.
Brent crude futures for July gained 58 cents, or 0.7 percent, to $84.02 a barrel by 9:33 a.m. Saudi time on Thursday. US West Texas Intermediate crude for June climbed 53 cents, or 0.7 percent, to $79.53 a barrel.
“The oil market was supported by speculation that if WTI falls below $79, the US will move to build up its strategic reserves,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
The US has said it aims to replenish the Strategic Petroleum Reserve after a historic sale from the emergency stockpile in 2022 and wants to buy back oil at $79 a barrel or less.
In the Middle East, expectations grew that a ceasefire agreement between Israel and Hamas could be in sight following a renewed push led by Egypt.
Still, Israeli Prime Minister Benjamin Netanyahu has vowed to go ahead with a long-promised assault on the southern Gaza city of Rafah despite the US position and a UN warning that it would lead to “tragedy.”
“As the impact of the US crude stock-build and the Fed signalling higher-for-longer rates is close to being fully baked in, attention will turn toward the outcome of the Gaza talks,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
“As long as the latest bout of optimism over a ceasefire sustains, I expect a continued downside bias in crude,” Hari added.
The US Energy Information Administration said crude inventories rose by 7.3 million barrels to 460.9 million barrels in the week ended April 26, compared with analysts’ expectations in a Reuters poll for a 1.1 million-barrel draw.
Crude stocks were at the highest point since June, the EIA said.
The US Federal Reserve held interest rates steady on Wednesday and signalled it is still leaning toward eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings.
Any delay in rate cuts could slow economic growth and dampen demand for oil.
Still, continuing supply reductions by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will support prices.
Analysts at Citi Research expects OPEC+ to hold output cuts through the second half of the year as it meets on June 1.
However, “if prices move to a bull case $90-100+ range, OPEC+ would likely ease cuts, providing a soft ceiling for oil,” they said in a note.
How AI will unlock billions of dollars in economic value for Saudi health sector
- AI and machine learning are revolutionizing patient outcomes and healthcare service efficiency
- Integration of AI in medical administration to revolutionize resource allocation, optimize hospital operations
RIYADH: Saudi Arabia’s health-tech sector is undergoing substantial transformation driven by artificial intelligence, promising significant economic and operational benefits.
A McKinsey & Co. analysis forecasts that by 2030 AI could unlock $15 to $27 billion in economic value for the Kingdom’s medical sector.
This can be achieved by automating up to 40 percent of healthcare tasks, enhancing efficiency and reducing manual workload.
Such advancements align with Saudi Arabia’s ambition to emerge as a regional technology hub, with the medical sector being a key division benefiting from this digital transition.
Crown Prince Mohammed bin Salman has highlighted the potential of this revolution, and is quoted as saying: “We are living in a time of scientific innovation, unprecedented technology, and unlimited growth prospects. These new technologies, such as artificial intelligence and the Internet of Things, if used optimally, can spare the world many disadvantages and can bring enormous benefits to the world.”
Time of transformation
In a recent interview with Arab News, Nadine Hachach-Haram, a surgeon and co-founder of the health-tech platform Proximie, shared her observations about the transformative applications of AI. She said this could be used for enhancing patient safety, communication, and service efficiency across Saudi Arabia’s healthcare sector.
“AI use allows the automation of necessary but time-consuming and tedious administrative processes,” Hachach-Haram said. “AI implementation will help minimize errors, optimize efficiency, revolutionize patient care, and improve global healthcare accessibility.”
She also underscored the government’s approach to fostering AI, including initiatives such as the National Data Bank and cloud infrastructure to support public and private sector collaboration.
Hachach-Haram explained that AI and machine learning are revolutionizing patient outcomes and healthcare service efficiency in the Kingdom as the nation embraces these technologies to align with the Saudi Health Sector Transformation Program.
This undertaking is a pivotal element of the Ministry of Health’s strategy under Vision 2030, which aims to enhance medical care access and modernize facilities to ensure the well-being of the populace.
Proximie, a global healthcare platform, is at the forefront of this shift, playing a critical role in the SEHA Virtual Hospital’s efforts to overcome geographical constraints, enhance patient safety, and facilitate the sharing of medical expertise across Saudi Arabia.
Hachach-Haram highlighted the use of AI in a medical setting. “The hospital utilizes AI to triage caseloads and employs the latest imaging technologies to aid in remote scan interpretations.”
This evidence demonstrates tangible benefits, with Proximie instrumental in supporting cardiology surgeries at regional hospitals, thereby minimizing the need for patient referrals and travel, Hachach-Haram said.
“The hospital has the capacity to treat over 400,000 patients a year. It uses AI to triage caseloads and makes the latest imaging technologies available to support the interpretation of scans remotely,” she added.
She shared a poignant illustration of this impact in the case of Noura Saleh, 70, from Tabuk, who required urgent surgery following stroke-induced heart failure.
The operation was successfully executed at a local hospital, with the SEHA Virtual Hospital’s cardiology team providing remote guidance through Proximie.
Hachach-Haram said: “It’s a great example of how distance is no longer an obstacle to receiving the best care promptly.”
Improved access and care
Speaking to Arab News, Rania Kadry, co-founder of the Egyptian health-tech platform Almouneer, shared her prediction of the Kingdom’s transformation over the next decade.
Kadry envisions AI significantly impacting medical diagnostics, treatment planning, and personalized medicine in Saudi Arabia.
“This will lead to improved patient outcomes, reduced healthcare costs, and enhanced efficiency in healthcare delivery,” she said.
She added that AI-driven telemedicine platforms and remote-monitoring systems are expected to become more prevalent, particularly in rural areas, increasing access to healthcare services nationwide.
“Moreover, AI will continue to be integrated into healthcare administration processes, optimizing resource allocation, and improving overall healthcare management,” she added.
Hachach-Haram addressed a crucial aspect of AI in healthcare: patient trust and data privacy. She acknowledges the apprehension many patients feel about the use of their health data. However, she believes that proper communication about the benefits of healthcare innovation and knowledge-sharing might encourage patients to become proactive proponents of AI.
“Many patients are understandably nervous about the use of their sensitive health data, but if the benefits of healthcare innovation and knowledge-sharing are clearly explained, patients may embrace becoming ambassadors about the benefits of using and sharing data — helping the entire ecosystem,” she said.
Furthermore, the integration of AI in healthcare administration is predicted to revolutionize resource allocation and optimize hospital operations.
Kadry added: “One example could be the widespread implementation of AI-powered predictive analytics systems in Saudi Arabian hospitals.” This would leverage patient data to forecast healthcare needs and enhance service delivery, she added.
Kadry also underscored the Kingdom’s commitment to health tech and AI innovation, referencing Saudi Arabia’s ambitious plan to allocate 2.5 percent of its gross domestic product, approximately $16 billion by 2040, to research and development, with a focus on aging and chronic diseases.
“Can you imagine how much the country will progress under the young and progressive leadership?” She highlighted the launch of the Hevolution Foundation, a $20 billion Saudi Arabia initiative dedicated to advancing human health and extending life expectancy globally.
Despite being in its early stages, the utilization of AI technology holds immense potential to positively influence patient outcomes across the Arab world.
Rotana to double Saudi-based workforce to 5k employees as it expands offering
RIYADH: Rotana Hotels is planning on more than doubling its workforce in Saudi Arabia to 5,000 staff as it expands its outlets to 15, the company’s CEO has told Arab News.
Speaking on the sidelines of the Future Hospitality Summit in Riyadh, Philip Barnes highlighted the diverse nature of hotels in terms of size and staffing, indicating that the current portfolio in the Kingdom employs around 2,000 people.
He said that between eight and nine hotels are under development and set to open within the next two to three years, and the firm has “a number of others coming.”
Barnes expressed his desire to expand the company’s presence in various parts of Saudi Arabia, not just in the holy cities of Madinah and Makkah.
Reflecting on the increase in workforce needed, he said: “I think you’d be looking at 4,000 to 5,000 people by the time we get to that 15 hotel.
“It ranges between 200 to 300 people per property as we go forward depending on the size of the property.”
Rotana is seeking opportunities across a broader range of locations within Saudi Arabia, and Barnes believes that being a UAE-based company gives it an insight into the tourism landscape that other firms may lack.
“We see ourselves as being able to come into the Kingdom in a way that others can’t because we are recognized as that brand that is from the region. We can go into destinations that maybe aren’t the premier destinations as other people see them, everybody wants to be in Riyadh, everybody wants to be in Jeddah,” Barnes said.
He added: “We have a lot of things happening, but we have further developments coming online in Egypt over the course of the next two years. We’ve got more coming on board in Qatar.”
He also stated that the company is also exploring new territories, with recent moves into Pakistan, which Rotana views as a promising and emerging market
Additionally, he further explained the group’s plans for expansion by exploring opportunities in Eastern Europe, though not on a large scale. Turkiye is also a focus, with two hotels opened in the past year and more development expected.
“We’re also opening two hotels in London, not in central London. We’re opening one hotel in Kingston, which is a suburb of London, 20 minutes from downtown,” Barnes said.
He continued: “I personally am hoping that that will then be a springboard into six or seven or eight other Centros around the UK in places like Liverpool or Leeds or, Manchester etc. because I see it as being a brand that has tremendous legs, and we've already got a number of those properties here in this part of the world.”
