Oil prices fall on renewed US-China tensions

A worker walks toward a rig after placing ground monitoring equipment in the vicinity of the underground horizontal drill in Loving County, Texas. (Reuters/File)
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Updated 05 May 2020

Oil prices fall on renewed US-China tensions

  • While global oil demand is expected to recover modestly from April lows as countries ease some lockdown measures

LONDON: Oil prices fell on Monday on worries that a global oil glut may persist even as coronavirus pandemic lockdowns start to ease and amid a fresh spat between the US and China over the origin of the virus. Brent crude was down 7 cents, or 0.3 percent, at $26.37, while US West Texas Intermediate (WTI) crude fell 39 cents, or 2 percent, to $19.39.

While global oil demand is expected to recover modestly from April lows as countries ease some lockdown measures, the glut created over months in storage facilities will loom over the markets.

“As oil inventories are likely still increasing over the coming weeks, oil prices remain vulnerable to renewed setbacks,” said UBS analyst Giovanni Staunovo.

However, Goldman Sachs was more optimistic than before about the rise of oil prices next year due to lower crude production and a partial recovery in oil demand.

The Wall Street bank raised its 2021 forecast for global benchmark Brent to $55.63 per barrel from $52.50 earlier. The bank hiked its estimate for WTI to $51.38 a barrel from $48.50 previously.

Signs that the output cuts may help reduce the supply overhang have emerged with the narrowing of Brent’s contango — the market structure in which later-dated prices are higher than prompt supplies. The six-month spread of Brent futures hit its narrowest in almost a month at a discount of around $6.50, up from a record wide discount of almost $14 in late-March, reflecting decreasing oversupply expectations and making storage for later sale less profitable.

The re-emergence of trade tensions between the US and China also weighed on prices.

Adding to US President Donald Trump’s threat last week to impose tariffs on China, Secretary of State Mike Pompeo said on Sunday there was “a significant amount of evidence” that the new coronavirus emerged from a Chinese laboratory.

“Demand projections have sobered up last week’s enthusiasm and this, together with the prospect of new US-China trade tensions, have weighted heavily on prices today,” said Rystad’s senior oil markets analyst Paola Rodriguez-Masiu.

Oil prices recovered some of their losses after US Treasury Secretary Steven Mnuchin said he expected China to make good on its trade agreement with the US. He also said he expected oil markets to rebound, and that the Trump administration was looking for more storage capacity.

Concerns about weak manufacturing data in Asia and Europe, assessed by Purchasing Managers’ Index (PMI) of manufacturing companies, also put pressure on oil prices.

In Asia, a series of PMIs from IHS Markit fell deeper into contraction from March, with some diving to all-time lows and others hitting levels last seen during the 2008-2009 global financial crisis.

PMIs in France, the euro zone’s second-biggest economy, dropped in April to the lowest level on record. IHS Markit’s Final PMI for German manufacturing, which accounts for about a fifth of Europe’s largest economy, shrank at the fastest rate on record.

The US dollar surged against most major currencies on Monday amid fears that last year’s US-China dispute will be re-ignited.

Oil is usually priced in dollars so a stronger greenback makes crude more expensive for buyers with other currencies.


Saudi inflation slows to 4.9% in March as VAT effect lingers

Updated 46 min 8 sec ago

Saudi inflation slows to 4.9% in March as VAT effect lingers

  • Saudi inflation jumped to 6.1% after VAT was increased last July
  • Food and beverages were the biggest contributors to inflation in March

RIYADH: Saudi Arabia’s annual inflation rate fell marginally in March as last July’s increase in value-added tax (VAT) continued to assert an effect on prices.

The consumer price index rose an annual 4.9 percent in March, compared with a 5.2 percent increase in February, the General Authority of Statistics (GASTAT) said in a statement on Thursday.

The inflation rate jumped to 6.1 percent in July 2020 from 0.5 percent in June as the VAT rate was increased from 5 percent to 15 percent and has mainly been drifting lower since.

The biggest contributors to March’s reading were food and beverage prices, which increased 10.2 percent from a year earlier, driven by a 12 percent increase in the cost of meat and 10.9 percent higher prices for vegetables, GASTAT said.

Transport costs rose 10.5% as vehicle prices rose 9.6%, while tobacco gained 13.1 percent and communication added 13.2 percent.

The cost of education fell 9.5 percent year over year, while housing, water, electricity, gas and other fuels declined 2.7 percent, driven by a 3.9% drop in housing rentals.

Saudi Arabia’s acting information minister said in November last year the kingdom could review its VAT increase once the coronavirus pandemic ends. Analysts at Al Rajhi Capital predicted the higher VAT rate would generate SR28 billion ($7.5 billion) in 2020 and SR88 billion in 2021 if maintained.

In 2018, Saudi Arabia and the UAE became the first two countries in the Arabian Gulf to introduce VAT.


Amazon conciliatory as US eyes regulation

Updated 16 April 2021

Amazon conciliatory as US eyes regulation

  • Founder Jeff Bezos tells investors his e-commerce empire needs a better “vision” for its workers
  • Before stepping down as CEO, he laid out a new goal for the company to be “Earth’s best employer”

SAN FRANCISCO, USA: US tech giant Amazon on Thursday sounded conciliatory notes as the US government considers stricter regulatory measures against America’s largest digital platforms.
Founder Jeff Bezos told investors his e-commerce empire needs a better “vision” for its workers, just days after an effort to create the company’s first labor union was defeated.
Some Amazon executives had fired off snappy comments at various politicians who supported the labor campaign, but their chief executive took a more circumspect approach to the anti-union victory at its plant in Bessemer, Alabama.
“Does your chair take comfort in the outcome of the recent union vote in Bessemer?” Bezos asked rhetorically in an annual letter to shareholders.
“No, he doesn’t. I think we need to do a better job for our employees.”
In the letter, which was his final before stepping down as chief executive, Bezos laid out a new goal for the company to be “Earth’s best employer and Earth’s safest place to work.”
“Despite what we’ve accomplished, it’s clear to me that we need a better vision for our employees’ success,” Bezos said.
The vote count in the contentious unionization drive at the warehouse in the southern state of Alabama last week showed a wide majority of workers rejecting the move.
“Bezos’s admission today demonstrates that what we have been saying about workplace conditions is correct,” said Stuart Appelbaum, president of the union that vied to represent Amazon workers.

Amazon founder and CEO Jeff Bezos. (AP/file photo)

“But his admission won’t change anything, workers need a union — not just another Amazon public relations effort in damage control.”
Bezos rejected news reports that he said unfairly portray Amazon workers as “desperate souls and treated as robots.”
“That’s not accurate,” Bezos said.
“They’re sophisticated and thoughtful people who have options for where to work.”
Unions and political leaders have argued that Amazon employees face constant pressure and monitoring, with little job protection, highlighting the need for collective bargaining.
Amazon has held firm that most of its workers don’t want or need a union and that the company already provides more than most other employers, with a minimum $15 hourly wage and other benefits.
Bezos had already shown deference to political momentum, announcing support for an increase in corporate taxes sought by US President Joe Biden to help finance a $2 trillion infrastructure plan.
Bezos embraced the move just days after Biden singled out Amazon for avoiding federal income taxes while proposing to boost the corporate tax rate to 28 percent.
“We support the Biden administration’s focus on making bold investments in American infrastructure,” Bezos said.
“We recognize this investment will require concessions from all sides — both on the specifics of what’s included as well as how it gets paid for (we’re supportive of a rise in the corporate tax rate).”
Amazon has been the target of critics for years who claim it pays little or no corporate taxes. The company has defended its policies, saying that its investments offset taxes as intended by the tax code.
Last month, Biden cited a 2019 study showing 91 Fortune 500 companies, “the biggest companies in the world, including Amazon... pay not a single, solitary penny of federal income tax,” adding, “that is just wrong.”
Bezos’s support for raising corporate taxes was echoed Thursday by the Chamber of Progress, a self-described “center-left” tech industry coalition whose roster of members includes Amazon, Facebook, Google and Twitter.
“Many tech industry leaders view corporate taxes as a patriotic duty and a wise investment in a well-functioning society,” chamber chief Adam Kovacevich said in message posted online.
“President Biden’s proposal to raise corporate tax rates to make major investments in infrastructure is a tradeoff that many in the tech industry can support.”
Meanwhile, political will to regulate Internet giants whose power has grown dramatically during the pandemic has seemed to increase.
US House Antitrust Subcommittee Chairman David Cicilline said Thursday that a 16-month investigation makes it clear that Congress must act.
“Amazon, Apple, Google and Facebook each hold monopoly power over significant sectors of our economy,” Cicilline said in a statement.
“This monopoly moment must end.”

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Sanctioned Russian IT company partners with Microsoft, IBM

Updated 16 April 2021

Sanctioned Russian IT company partners with Microsoft, IBM

  • Positive Technologies' website boasts of a number of accomplishments, such as providing cybersecurity for the 2018 soccer World Cup hosted by Russia
  • The US said big conventions hosted by Positive Tech are “used as recruiting events” by the FSB and the GRU, Russia’s military intelligence agency.

The US Treasury Department on Thursday slapped six Russian technology companies with sanctions for supporting Kremlin intelligence agencies engaged in “dangerous and disruptive cyberattacks.”
But only one of them stands out for its international footprint and partnerships with such IT heavyweights as Microsoft and IBM.
That company, Positive Technologies, claims more than 2,000 customers in 30 countries, including major European banks Societe Generale and ING, as well as Samsung, SK Telecom of South Korea and BT, the British telecommunications giant.
Its clients also include the FSB, a successor to the KGB that “cultivates and co-opts criminal hackers” who carry out ransomware and phishing attacks, the Treasury Department said. The US said big conventions hosted by Positive Technologies are “used as recruiting events” by the FSB and the GRU, Russia’s military intelligence agency.
GRU agents are the swashbucklers of Russian intelligence. The agency stands accused of spearheading the hack-and-leak operation that interfered in the 2016 US presidential election to favor Donald Trump. Its agents also conducted the most damaging cyberattack on record, the runaway 2017 NotPetya virus that did more than $10 billion in global damage, its victims including the shipping giant Maersk and pharmaceutical company Merck.
The CEO of the software industry-supported Internet Research Institute in Moscow, Karen Kazaryan, said he was not familiar with most of the Russian IT companies sanctioned on Thursday. But Positive Tech is well-known in the industry for its annual Hack Days conference, which is scheduled for May 20-21 at a Moscow hotel.
Former CIA analyst Michael van Landingham applauded the naming and sanctioning of Russian IT companies known to have aided and abetted malign government activity.
“Naming specific companies can create incentives for educated and skilled Russians who might be able to obtain jobs elsewhere where they don’t support Russian state hacking,” he said.
Positive Tech’s specialty is identifying vulnerabilities in popular software such as Microsoft’s Windows operating system. The world’s intelligence agencies regularly lean on companies like it not to disclose potent vulnerabilities publicly when they find them but to instead quietly share them for hacking adversaries’ networks.
The US did not accuse Positive Technologies of any such behavior and the Treasury Department declined to answer questions about the company’s activities beyond a press release.
Nor would a Microsoft spokesperson discuss the company’s business relationship with Positive Tech. On its website, Microsoft names the company as one of among more than 80 security software providers to which it gives early access to vulnerability information so they can make sure their customers get patches quickly. IBM also lists Positive Technologies as a security partner, offering customers one of its scanning tools.
IBM didn’t respond to requests for comment Thursday. Neither did other US tech companies HP and VMware, which Positive Technologies lists as technology partners.
On its website, Positive Technologies lists Russia’s Defense Ministry as among its first major clients, in 2004 when it was two years old with just 11 employees. It claimed more than 800 employees in 2018.
Russia’s biggest business database lists the company’s CEO and founder as Yury Maximov, about whom little is known other than he graduated from Moscow State University. The company did not respond to questions sent to press contacts on its website.
Positive Tech’s website boasts of a number of accomplishments, such as providing cybersecurity for the 2018 soccer World Cup hosted by Russia and publishing data that same year on 30 high-risk vulnerabilities. It said it opened its first international office in London in 2010 and its first US office in 2012.
The company has sometimes used Framingham, Massachusetts, as its US location in news releases, though it’s not recorded in city or state records as a business by that name. An office building with an address linked to the company is a co-working space that can be rented on flexible terms for “one person or more.”
Market research firm IDC listed Positive Technologies as one of the fastest-growing companies in security and vulnerability management in 2012, in part because it was so small at the time, growing nearly 82% year-over-year to $30 million in worldwide revenue. Nearly all that revenue came from assessing vulnerabilities. But by 2015, its worldwide revenues fell 37.6% to $26.5 million, according to IDC, which eventually stopped tracking the company.


Makkah sees surge in real estate offices as work progresses on major projects

Updated 16 April 2021

Makkah sees surge in real estate offices as work progresses on major projects

  • Value of real estate transactions in 2020 rose 4.31% to $240.39 million

RIYADH: The number of real estate offices in the Makkah Al-Mukarramah area surged by nearly a third last year, as the number of transactions increased and work on some of the city’s biggest projects kept pace despite the challenges posed by the coronavirus disease (COVID-19) pandemic.

The number of real estate offices in Makkah reached 154 in 2020, a 32.76 percent increase from the 116 registered at the end of 2019.

The increase in manpower comes as figures from the Ministry of Justice showed that the total value of real estate transactions during 2020 in Makkah amounted to SR 901.48 million ($240.39 million).

This was an increase of 4.31 percent compared to the SR 864.24 million in transactions registered in 2019.

The number of real estate transactions in the entire Kingdom last year amounted to 277,924 deals, of which 9,333 — or 3.36 percent — were in Makkah.

The increased activity is a result of the government’s Vision 2030 initiatives, among which is the goal to host a greater number of Umrah pilgrims from abroad — specifically 30 million by 2030.

Work is currently underway on a number of high-profile projects in Makkah Al-Mukarramah to accommodate this increase in pilgrims and to raise the quality of life for residents.

The most prominent of Makkah’s developments is the Thakher Makkah project, which is considered one of the Kingdom’s largest real estate projects. The land area of the project amounts to 320,000 square meters, while the built-up area is around 3.4 million square meters.

Thakher Makkah consists of 85 hotel towers, 10 hotel apartment towers and eight residential towers, accommodating about 200,000 guests. The project is distinguished by its proximity to the Holy Mosque in Makkah Al-Mukarramah, which is located just 1,300 meters away.

Another mega project is the Jabal Omar project, which is being built on a total area of 230,000 square meters. The mixed-use project includes 40 hotel towers that host apartments, luxury residential units, international hotels and commercial markets.

Makkah Gate is the first suburban project owned by the Holy Capital’s Municipality through its investment subsidiary. The project provides an ambitious and practical vision for the development of the western suburb of Makkah, which is the main gateway to enter Makkah.

The project is located on a land area of approximately 8,300 square meters and upon completion will accommodate more than half a million people by 2022. It includes several residential neighborhoods, a university, a medical city, a complex for government departments, museums and a large wild park.

Jabal Khandama is another addition to the development boom in Makkah. The total built-up area is estimated at 910,000 square meters and is expected to be completed by the end of 2030. The project is expected to reach 88 floors, with an estimated height of 450 meters.

The Jabal Al-Sharashef development project, which has a built-up area of 1.6 million square meters, aims to reconfigure the urban neighborhood environment and will address issues such as urban formation, housing, transportation networks, utilities and public services. It will accommodate around 190,000 seasonal hotel residents and 650,000 permanent residents.

Work is underway on the Kudai Towers project, which is located around 1.7 kilometers from the Holy Mosque. Kudai Towers is comprised of 12 hotel towers, 10 of which will be four-star hotels consisting of 30 floors, while two will be five-star hotels consisting of 45 floors. The project’s capacity is 10,000 luxury hotel rooms. It will boast four helipads, 70 restaurants and the largest dome in the world, sitting at the top of the project.

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Building a sustainable future: Top quotes from the FII ESG webinar

Updated 16 April 2021

Building a sustainable future: Top quotes from the FII ESG webinar

RIYADH: Participants at the Future Investment Initiative (FII) Institute virtual event on Thursday called for inclusive efforts towards achieving environmental, social and governance (ESG) goals, in order to help build a sustainable future for all.

The virtual event — titled “The Neo-Renaissance: Mobilizing ESG for a Sustainable Future” – was opened by FII Institute CEO Richard Attias, who told delegates: “We need to build more sustainable markets in 2021.”

“As we continue to battle the global pandemic, we need to rethink our approach to global sustainability… Although ESG has proven its worth, much remains to be done to ensure we use it to its full potential. The low level of inclusion and participation of emerging markets in the development of ESG frameworks is counterproductive to global sustainability,” he added.

Henry A. Fernandez, chairman and CEO of MSCI, US, said: “We have to look at ESG not only as a threat but also as a significant opportunity. Many companies in emerging markets will come out as major winners and will attract more capital in developed markets.”

Noel Quinn, group CEO of HSBC, highlighted the importance of a clear methodology for sectors to measure their commitments by. “The climate crisis may not be reversible and that’s why I think banks, and financial services more widely, have taken on board the need to make rapid progress and catch up on the work that’s needed around sustainability,” he said.

Bandar Hajjar, president of the Jeddah-based Islamic Development Bank, said ESG is not only important for the developed economy but for the developing economy as well and noted that emerging markets face more challenges in meeting their ESG requirements.

Lorenzo Simonelli, chairman and CEO of Baker Hughes, UK, said that transition is happening, but the energy sector needs to move fast to achieve global goals of reducing carbon emissions.

Anish Shah, MD and CEO of Mahindra and Mahindra, India, pointed out that ESG is “not a distraction” or “something that is a checkbox” but reflects “who we are and what we do.”

Ayaan Zeinab Adam, senior director and CEO AFC Capital Partners from Nigeria, said: “We need to look at Africa from the context of emissions. It is less than four percent, yet Africa is significantly suffering from the rise in global temperature.”

Muhamad Umar Swift, CEO, Bursa Malaysia, said: “A track record of holding companies to account when it comes to ESG issues is something that we are encouraging fund managers to demonstrate.” Investors should think long-term and support companies who are doing the right thing for the future, the chief of the Malaysian stock exchange added.

Murray Roos, global director of capital markets at the London Stock Exchange Group, said: “All investors: Please think long-term and support companies that are doing the right thing for the future.”

Guo Peiyuan, chairman of SynTao Green Finance, China, said: “We believe that climate change and carbon neutrality goals will be very important for ESG investors. Overseas investors are more and more interested in ESG assets in China because they provide lower risk.”

Geoffrey Odundo, chief executive at Nairobi Securities Exchange, said: “We think that there is a need for more rigor around regulations so that sustainable assets are very well regulated and we have a very clear alignment on local reporting standards and indicators.”

Jeff Ubben, founder and managing partner of Inclusive Capital Partners, said: “Renewable energy today is not ‘additional.’ It’s economic on its own.”

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