Oil Updates – prices slip as inflation concerns offset Middle East tensions

Brent crude futures were down 20 cents or 0.2 percent to $90.28 a barrel at 3:20 p.m. Saudi time. Shutterstock
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Updated 11 April 2024
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Oil Updates – prices slip as inflation concerns offset Middle East tensions

LONDON: Oil prices slipped on Thursday as persistent inflation dampened rate cut optimism but stayed near six-month highs as investors braced for a potential attack on Israeli interests by Iran.

Brent crude futures were down 20 cents or 0.2 percent to $90.28 a barrel at 3:20 p.m. Saudi time, while US West Texas Intermediate crude futures lost 30 cents or 0.3 percent to $85.91 a barrel.

“We think it will be difficult to maintain Brent above $90 in 2H24 without actual supply disruption associated with geopolitical events,” said global energy strategist Vikas Dwivedi of Macquarie.

“As a result, we expect oil to turn bearish as the year progresses due to non-OPEC supply growth, a material amount of OPEC+ spare capacity re-entering the market, and the potential that continuing inflation softens demand.”

Minutes from the US Federal Reserve showed officials worried that progress on inflation might have stalled and a longer period of tight monetary policy would be needed to tame inflation in the world’s largest economy.

Investors who had earlier expected a rate cut in June now see September as a likelier timing for the easing cycle to begin, following a third straight stronger-than-forecast reading on consumer inflation.

Higher-for-longer rates could dampen economic growth and suppress demand for oil.

Meanwhile the Middle East is on alert for possible Iranian retaliation for a suspected Israeli air strike on Iran’s embassy in Syria on April 1.

Earlier this week, Israel and Hamas began a fresh round of negotiations in their more than six-month-old Gaza war but those talks have yielded no agreement.

US Secretary of State Antony Blinken has told Israeli Defense Minister Yoav Gallant that Washington will stand with Israel against any threats by Iran, the US State Department said on Wednesday.

“Prices remain sensitive to geopolitical developments in the Middle East, with market participants pricing for the risks of supply disruptions if tensions were to drag for longer,” said Yeap Jun Rong, market strategist at IG.

 


Startup Wrap – regional startup activity flourishes  

Updated 7 sec ago
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Startup Wrap – regional startup activity flourishes  

CAIRO: The startup ecosystem in the Middle East and North Africa region saw a flurry of activity as venture investments and acquisitions bloom. 

Saudi Arabia-based Software-as-a-Service provider Merit has raised $12 million in its pre-series B funding round, led by Alistithmar Capital i-Cap and followed by existing series A investors Tech Invest Com and Hambro Perks Oryx Fund. 

Founded in 2016 by Julie Barbier-Leblan and Thrishan Padayachi, Merit assists businesses in increasing customer and employee engagement via a suite of cloud-based SaaS platforms, enterprise solutions, applications, and software.  

This new round will help Merit develop its technology to enhance customer engagement. In 2021, Merit raised $5 million in a series A round led by Saudi Arabia’s Impact46, along with Tech Invest Com, Arzan VC, Hambro Perks Oryx, and several regional angel investors. 

Riyad Capital launches 1957 Ventures to support digital transformation 

Riyad Capital, backed by Riyad Bank, has launched the 1957 Ventures investment fund to drive transformative growth in Saudi Arabia’s fintech sector. 

The fund aims to accelerate the Kingdom’s digital transformation by creating opportunities for innovative fintech business models. 

Abdullah Alshwer, CEO of Riyad Capital, stated, “The 1957 Ventures Fund embodies a forward-thinking financial vision aligned with the Kingdom’s ambitious digital transformation goals; this fund signifies a strategic investment in the future of Saudi fintech.”  

“Our institutional approach will unlock new levels of innovation, driving both sector growth and sustainable economic impact,” he added. 

Saudi logistics startup MDD closes $1.3m series A round 

Saudi Arabia-based logistics startup MDD has closed its series A round with $1.3 million in funding for a 5 percent stake with a valuation of $26 million. 

Founded in 2019, MDD provides supply chain solutions for businesses. 

Saudi startup Sorbet’s raises funding round from web3 VC Adverse 

Saudi web3 startup Sorbet raised an investment round from the Kingdom’s recently announced venture capital firm Adverse. 

Founded by Rami Djebari and Maher Ayari, Sorbet aims to simplify business processes for freelancers by cutting fees and intermediaries. 

“Receiving support from an experienced partner like Adverse will accelerate our development and enhance our market strategy. This collaboration is a milestone in breaking down financial barriers and enabling limitless growth opportunities for professionals in the region,” Djebari said. 

Egyptian fintech e-Finance acquires stakes in Al Ahly Momken and EasyCash 

Egypt-based fintech e-Finance for Digital and Financial Investments has acquired a 25 percent stake in Al Ahly Momken and a 13 percent stake in EasyCash for Digital Payments for an undisclosed deal value. 

Founded in 2005, e-Finance is involved in the development of digital payment infrastructure and digital space to help achieve social development goals.  

Al Ahly Momken, based in Egypt, is a digital payment provider, serving over 90,000 merchants and more than 5 million customers.  

Meanwhile, EasyCash, also based in the north African country, provides payment services for individuals, merchants, and businesses. 

These acquisitions align with e-finance’s strategy to expand its footprint in the digital payments market and support Egypt’s Vision 2030 for digital transformation. 

Egypt’s OneOrder closes $16m series A round 

Egypt-based logistics startup OneOrder has raised $16 million in a series A round in a mix of equity and debt, led by Delivery Hero Ventures, with participation from Norrsken22 and existing investors, Nclude and A15. 

Founded in 2022 by Tamer Amer and Karim Maurice, OneOrder is a tech-enabled supplier and wholesale distributor that offers the food and beverages industry a supply of quality goods with embedded financing.  

The company plans to expand into the Gulf Cooperation Council region by the fourth quarter of 2024. In December 2022, OneOrder closed a seed round at $3 million. 

Jordan’s fintech liwwa takes $5m loan 

Jordan-based fintech liwwa has secured a $5 million loan from the US International Development Finance Corp.. 

Founded in 2013 by Ahmed Moor and Samer Atiani, liwwa is a peer-to-peer lending network that connects investors and small businesses through smart business loans.  

The latest cash influx will enable liwwa to finance further small and medium sized enterprises across various sectors. Liwwa’s last funding round was in 2022, when it raised $18.5 million in a pre-series B round of equity and debt. 

Egyptian investment bank EFG Hermes acquires stake in Danish wealth management firm 

Egypt’s investment bank, EFG Hermes, a subsidiary of EFG Holding, has acquired a minority stake in the Danish digital wealth manager Kenzi Wealth for an unknown value. 

The new partnership will enhance EFG Hermes’ digitalization vision. By combining EFG Hermes’ client network and Kenzi Wealth’s AI tools, EFG Hermes will be able to offer its clients a more efficient and personalized investment experience.  

Founded in 2021 by Mohamed El-Masri, Kenzi Wealth specializes in tailoring investment features to meet the needs of investors. 

Mohamed El-Masri, founder of Kenzi Wealth. Supplied

UAE’s Plain Tiger raises funding round 

UAE-based business-to-business marketplace Plain Tiger has raised an investment from UAE’s venture capital firm AngelSpark for an undisclosed amount. 

Founded in 2021 by Alexandra Polson and Oliver Baillie, Plain Tiger connects hotels with eco-friendly suppliers, saving them time, money, and reducing their environmental impact.  

The investment is part of Plain Tiger’s $1.5 million seed round, which will be used to expand into Saudi Arabia and accelerate more hotels’ pathway to net zero procurement. 

UAE’s Revent closes $900k in pre-seed round 

UAE-based electronics marketplace Revent has raised $900,000 in a pre-seed round, provided by Techstars and a group of angel investors. 

Founded in 2022 by Baldeep Singh and Dhananjay Choubey, Revent offers SMEs pre-owned devices on monthly subscriptions across the UAE and Saudi Arabia.  

The funds will be used to build a self-service platform for businesses, along with growing Revent’s client base in Saudi Arabia. 

UAE’s proptech Keyper closes $4m equity round 

UAE-based proptech Keyper has raised $4 million in equity in a pre-series A round, led by BECO Capital and Middle East Venture Partners, with participation from existing investors Vivium Holding, Jabbar Group, Signature Developers, and new investors Annex Investments, Pin Investment, and Al Qahtani Investment, among other angels. 

The company has also received an additional $30 million in Shariah-compliant sukuk financing from global asset manager Franklin Templeton Investments Ltd., bringing its cumulative capital raised to-date to over $40 million.  

Founded by Omar Abu Innab and Walid Shihabi in 2022, Keyper offers a property management platform where tenants can track their expenses and charge online, and investors get real estate portfolios and access to data-driven insights.  

Keyper will invest the fresh funds into digitizing the rental experience in the UAE and scaling its innovative rent now, pay later solution. Last October, Keyper raised a $6.5 million seed round. 

UAE’s proptech Huspy raises investment round 

The app of proptech firm Huspy. Supplied

UAE-based property technology firm Huspy has raised a fresh investment round led by Balderton Capital, with further participation from existing investor Fifth Wall, amongst other investors. 

Founded in 2020 by Jad Antoun and Khalid Ashmawy, Huspy facilitates the home buying and financing process through its online marketplace.  

The company claims that this round of funding is at a higher valuation than the $37 million series A raised in 2022. The newly acquired capital will be deployed to build a super app for real estate. 

Egypt’s proptech Birdnest raises pre-series A round 

Egypt-based proptech Birdnest has closed an undisclosed pre-series A funding round for a 20 percent stake in the company, led by Beltone Venture Capital and CI Venture Capital. 

Founded in 2020 by Mostafa El-Nahawy and Ahmed Fadda, Birdnest offers furnishing services and rental management solutions to ensure maximum returns for real estate investors and value for tenants.  

The funds are earmarked for the expansion of the regional quality team, the enhancement of proprietary technologies, and marketing initiatives to reinforce Birdnest’s market position.


Oil Updates – crude steady as investors weigh US rate fears, firmer seasonal demand

Updated 24 May 2024
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Oil Updates – crude steady as investors weigh US rate fears, firmer seasonal demand

SINGAPORE: Oil prices were stable on Friday as investors considered the latest comments from the US Federal Reserve on interest rates amid sticky inflation, while signs of firming seasonal US fuel demand lent support, according to Reuters.

Brent crude futures rose 2 cents at $81.38 a barrel at 6:15 a.m. Saudi time, while US West Texas Intermediate crude futures were down 1 cent at $76.86.

Both benchmarks settled at multi-month lows on Thursday, with Brent crude futures closing at their weakest point since January and US crude futures hitting a three-month low.

Brent futures were headed for weekly declines of more than 3 percent, while WTI futures were poised for a slide of nearly 4 percent from last week as ongoing macroeconomic constraints in the US held prices in the balance.

“The sore demand sentiment owing to the hawkish Fed outlook at rates and the backdrop of ‘possibly higher-for-longer rates’ weighed significantly on oil prices this week,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova.

Minutes released on Wednesday from the Fed’s latest policy meeting showed policymakers questioning whether current interest rates are high enough to tame stubborn inflation.

Some officials said they would be willing to hike borrowing costs again if inflation surged. However, Fed Chair Jerome Powell and other policymakers have since said they feel further rate hikes are unlikely.

Higher rates could slow economic growth and crimp fuel demand.

Meanwhile, strengthening US gasoline demand was helping to stabilize prices ahead of the Memorial Day holiday weekend, which is considered the start of the US summer driving season.

Gasoline demand in the US reached its highest level since November, the Energy Information Administration said on Wednesday. That helped support the market as US drivers account for around a tenth of global oil demand, “making the upcoming driving season a pillar of the recovery in global demand growth,” ANZ analysts said in a note.

All eyes are now on the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, set to meet on June 1, where they are expected to discuss whether to extend voluntary oil output cuts of 2.2 million barrels per day.

“The market is also tentative about taking an aggressive positioning ahead of next week’s OPEC meeting, where supply policy will be discussed,” ANZ analysts added. 


Oil creeps back up after three days of losses

Updated 23 May 2024
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Oil creeps back up after three days of losses

Oil prices crept up on Thursday, clawing back some of the previous three days’ losses.

The gains were made despite the US Federal Reserve entertaining a further tightening of interest rates if inflation remains sticky, a move that could hurt oil demand.
Brent crude futures were up 92 cents, or 1.1 percent, at $82.82 a barrel by 1317 GMT. US West Texas Intermediate crude futures were 97 cents, or 1.3 percent, higher at $78.54. Both benchmarks fell more than 1 percent on Wednesday for their third straight day of losses.

Saudi crude exports
Saudi Arabia’s crude exports reached 6.41 million barrels per day in March, according to an analysis from the Joint Organizations Data Initiative.
This figure increased by 96,000 bpd, or 1.52 percent, compared to the previous month, marking a nine-month high. Furthermore, the data indicated that the Kingdom’s crude production fell to 8.97 million bpd, reflecting a monthly decrease of 0.42 percent.
This can be linked to the voluntary oil production cuts adopted by members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+. Saudi Arabia announced in March the extension of its 1 million bpd cut, initially implemented in July 2023, until the end of the second quarter of 2024.
The Ministry of Energy said that the Kingdom’s production will be approximately 9 million bpd until the end of June.
Meanwhile, refinery crude output, representing the processed volume of crude oil yielding gasoline, diesel, jet fuel, and heating oil, fell by 4 percent compared to the previous month, reaching 2.56 million bpd, according to JODI data.

 

 


IMF demands Pakistan secure parliamentary approval on reforms for loan agreement— official

Updated 23 May 2024
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IMF demands Pakistan secure parliamentary approval on reforms for loan agreement— official

  • Government will present “prior actions” needed to secure IMF loan in federal budget next month, says finance ministry official 
  • Leading economist says Pakistan left with no option but to secure IMF bailout to meet external financing needs of $80 billion 

ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to seek parliamentary approval on major economic reforms related to the energy, power, tax sectors and on the privatization of state-owned enterprises (SOEs) before starting formal talks for another loan program, a finance ministry official said on Thursday. 

Facing low foreign exchange reserves, currency devaluation and high inflation, Pakistan last month completed a short-term $3 billion IMF program that helped stave off a sovereign default. However, the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer-term program with the global lender. 

An IMF mission reached Islamabad last week to negotiate with Pakistani authorities for a fresh bailout program, holding talks with officials on reforms in key economic sectors. The mission is wrapping up its visit today, Thursday, without reaching any staff-level agreement with Islamabad. 

The government would present the economic reforms demanded by IMF or “prior actions” in parliament in the Finance Bill 2024-25 likely to be presented on June 7, the finance ministry official with knowledge of the negotiations, said on condition of anonymity. 

“The IMF has suggested authorities to get parliamentary approval for the new loan program’s targets and conditions before initiation of the formal talks,” the official told Arab News. 

“In fact, these are the prior actions that Pakistan is required to take care of before reaching a staff-level agreement with the Fund for the new bailout package.”

The international lender has urged Islamabad to overhaul its SOEs and introduce tax, energy and power reforms. Pakistan has had to take painful measures in line with the IMF’s demands since 2022, which included hiking fuel and food prices. 

The finance ministry official said the government intends to introduce key reforms in the energy and power sectors in line with the IMF’s demands, besides broadening the tax base through progressive initiatives. 

“The government will take all parliamentary parties into confidence over the digitalization of the Federal Board of Revenue and the privatization of the SOEs,” he added. 

Sajid Amin, a senior economist and deputy executive director at the Sustainable Development Policy Institute (SDPI), said the government had “no option but to secure the IMF loan program.” He said the IMF’s program was critical in helping Pakistan meet its external financing needs of around $80 billion in the next three years. 

“The IMF wants political ownership of the loan program and that’s why it is pushing the government to get all the targets and conditions approved by the parliament,” Amin told Arab News.

“The biggest challenge for the government is to convince the coalition partners and opposition over its reforms agenda to secure the IMF loan,” he said. 

Amin warned the upcoming IMF program would be the “toughest” one for the government as it would not be easy for it to complete it. 
 


Goldman Sachs to establish regional headquarters in Riyadh: report

Updated 23 May 2024
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Goldman Sachs to establish regional headquarters in Riyadh: report

RIYADH: Goldman Sachs Group is set to become the first Wall Street bank to establish its regional headquarters in Saudi Arabia as it has reportedly obtained a license from the Ministry of Investment, reported Bloomberg.

As per the recently approved laws in Saudi Arabia, companies with state contracts must have a regional headquarters in the Kingdom with a minimum of 15 employees.

Arab News contacted the Investment Ministry to get a confirmation of the news but officials declined to comment.

It would be pertinent to mention here that Goldman Sachs currently has offices in Doha, Riyadh and Dubai.

Saudi Arabia has outperformed its target for attracting regional headquarters, with over 180 companies now established in the Kingdom. This number surpassed the initial goal of securing 160 HQs by the end 2023.

Saudi Arabia offers tax incentives for foreign companies that locate their regional headquarters in the Kingdom, including a 30-year exemption for corporate income tax.

The tax incentives include zero income tax for foreign entities that move their regional headquarters in the Kingdom, and these benefits can be availed from the date of the regional headquarters issuance license, according to Ministry of Investment.