All Posts (93)

Political Developments - July 2017

1. Sanctions against Qatar continue: Qatar has been under siege for the past month but it is so far feeling little pain. When four Arab nations, Saudi Arabia, the UAE, Egypt and Bahrain, blockaded Qatar’s airspace and shipping channels last month in a bid to force it to drop its maverick foreign policy and shut down its influential TV station, Al Jazeera, there was an initial burst of panic as some supermarket shelves emptied. But that quickly subsided, and since then…

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1.Total SA and CNPC sign gas development contracts with Iran: Iran signed a formal contract with Total SA and China National Petroleum Corp (CNPC) to develop its share of the world’s biggest natural gas field it shares in Gulf waters with Qatar, the first investment in the country by an international energy company since sanctions were eased last year. In November, Total and CNPC had signed a “heads of agreement” with National Iranian Oil Co. to develop phase 11 of the South…

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1. King Salman bin Abdulaziz appoints his son as crown prince: In a dramatic announcement from the royal palace on 21 June, Saudi ruler, King Salman bin Abdulaziz appointed his son, Prince Mohammed bin Salman, deputy crown prince, as the crown prince, removing the incumbent, Prince Mohammed bin Nayef. While it has been apparent for the last two years, ever since King Salman became the ruler in January 2015, that his son’s authority and influence was increasing steadily, the…

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A weekly report by the Energy Information Administration (EIA) on 21 June said crude inventories had fallen 2.5 million barrels and gasoline stockpiles slipped 0.6 million barrels. But, it also noted that petroleum in storage was still plentiful and that gasoline was above the upper limit of the average range for this time of year. Following this report, the price of the benchmark WTI crude fell to $42.34 a barrel, down 2.69 percent, far below its price of $54.45 a barrel in February. The…

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1. FDI into GCC countries: The “World Investment Report 2017” provides a mixed picture on foreign direct investments (FDIs) into the Gulf countries. GCC economies collectively attracted about $20.9 billion in 2016, down from $23.3 billion in 2015. The figures for 2014 and 2013 are $20.7 billion and $22.5 billion, respectively. The combined inflows into the GCC are not significant by global standards — India alone enticed about $45 billion of FDIs in 2016.

The…

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Political Developments - June 2017

1. Saudi Arabia and its allies break ties with Qatar: On 5 June, Saudi Arabia, the UAE, Bahrain, Egypt and Yemen snapped diplomatic ties with Qatar, accusing the island nation of supporting terrorist groups, including Al Qaeda, the Islamic State and those backed by Iran, and destabilising the region. Qatar’s partners in the Gulf Cooperation Council (GCC) have also blocked all transport and communication links with Qatar and asked its nationals to leave within two…

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Oil prices rebounded sharply in volatile trade on 13 June after earlier edging down as OPEC reported an increase in its production for May despite a supply cut agreement. Brent crude futures were at $48.49 per barrel, up 20 cents, while WTI was at $46.31 per barrel, up 23 cents.

Prices initially nudged higher in early morning trade after the world's top exporter Saudi Arabia outlined cuts to customers in July that included a reduction of 300,000 barrels per day (bpd) to Asia. But,…

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OPEC and other oil producers agreed at their Ministerial in Vienna on 25 May to an extension of supply cuts for nine months, up to the end of March 2018. Libya and Nigeria are exempt from the cuts, while Iran is permitted to retain its output target.

This meeting was preceded by hectic Saudi consultations with member- and non-member countries. On the eve of the Ministerial, Saudi minister of energy, Khalid A al-Falih had said that most participants are on board with the plan to rein…

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Iran receives French civilian aircraft:  Four ATR 72-600s are being delivered to Iran, the first instalment of a deal with the French manufacturer to purchase 20 passenger planes following the lifting of sanctions under the 2015 nuclear deal.

The first plane landed in Tehran on 17 May, with the other three expected later in the day. The planes were officially given to Iran Air in a ceremony on Tuesday in Toulouse, where ATR is based. Iran Air finalized a deal…

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1. Trump in West Asia: President Donald Trump visited Saudi Arabia and Israel on 21-24 May. In Riyadh, he had three summit meetings: a bilateral interaction with King Salman bin Abdulaziz; a meeting with leaders from the Gulf Cooperation Council countries, and a third summit with leaders of selected Muslim member-countries of the Organisation of Islamic Cooperation (OIC), said to number 55; Iran and Syria were not invited.

The Saudi-US joint statement reflected…

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1. Syria: The month began with news that President Putin and the leaders of Iran and Turkey had on 4 May agreed on the setting up of four “safe zones” in Syria, later referred to as “de-escalation” zones; these are: the city of Idlib, held by militia led by the Al Qaeda-affiliated Jabhat Nusra since mid-2015; north of the city of Homs, where the Turkish-backed Free Syrian Army (FSA) is dominant; the eastern countryside of Damascus, Al Ghouta, controlled by the Saudi-backed…

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The oil price scenario remained volatile largely because the OPEC and non-OPEC cuts in production, announced in November last year, have failed to make a major dent in oil inventories, even as US rig counts have continued to increase steadily. Oil prices fell to their lowest in six months on 5 May, when Brent went to $ 45. Both Brent and WTI rose sharply to over $ 48 (Brent) and over $ 45 (WTI), following Saudi Arabia’s OPEC governor’s statement that: “There’s an emerging consensus among…

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Economic Developments - May 2017

Saudi economic scenario: In an interview with Bloomberg, Saudi Arabia’s vice minister of economy and planning, Mohammed Al Tuwaijri made the following main points:

(i) Sale of international bonds: Al Tuwaijri said that the finance ministry’s debt management office may decide to tap the market in the fourth quarter this year. The size of the issuance will depend on market conditions and investor appetite but could potentially be as much as $10 billion.…

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Leading Gulf oil producers Saudi Arabia and Kuwait gave the clearest signal yet that OPEC plans to extend into the second half of the year a deal with non-OPEC producers to curb oil supplies. Consensus is growing among oil producers that their supply restraint agreement should be extended after its initial six-month term, but there is as yet no agreement, Saudi Energy Minister Khalid al-Falih said on 20 April.

Kuwait's oil minister Essam al-Marzouq said he expected to see an extension…

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Major changes in Saudi Arabia : On 22 April, King Salman bin Abdulaziz issued a series of royal decrees effecting wide-ranging changes in policy matters and appointments to senior positions. These may be summarised as follows:

Saudi Arabia’s new Ambassador to the United States: Prince Khaled bin Salman bin Abdulaziz Al Saud. Born in 1985, he is a former fighter pilot who carried out airstrikes on ISIS in the region. Prince Khaled Bin Salman replaces…

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Saudi Arabia to invest in renewable energy:  Saudi Arabia will develop 30 solar and wind projects over the next 10 years as part of the kingdom’s $50 billion program to boost power generation and cut its oil consumption. The country plans to produce 10 percent of its power from renewables by 2023. It also plans to generate an unspecified amount of electricity from nuclear plants.
The country is currently seeking bids to build 700 megawatts of wind and solar power…

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Oil prices remained around $ 52-53 for Brent and $ 49 for WTI during the first days of April. WTI prices were above $ 49 on reports of increased refinery purchases and declining gasoline inventories. Prices were also kept at these levels following reports that OPEC would very likely extend production cuts beyond end-June.

Following the US missile strike in Syria, Brent crude futures jumped to $56.08 per barrel, in what traders called a knee-jerk reaction, before easing to $55.62 per…

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Political Developments - April 2017

1. Yemen: On 31 March, at a conference in Washington, UN Special Envoy Ismail Ould Cheikh Ahmed briefed UN members on the present situation in Yemen and the state of the peace process. He highlighted the deteriorating economic and humanitarian situation, and noted that food insecurity was now affecting 17 million people. He also discussed the plans being made by the pro-Hadi coalition to attack the country’s main port of Hodeidah, which is the principal entry point for…

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Prince Mohammed bin Salman's visit to Washington: Prince Mohammed bin Salman, Saudi deputy crown prince and defence minister, became the first Arab leader to meet President Donald Trump in Washington and have a well-attended lunch with the US president. Official Saudi sources said that the visit marked a "reset" in the US-Saudi relations, after the estrangement of the Obama years. It also marked a turn-around on the part of Donald Trump who, during the election campaign, had…

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The fall in oil prices that began on March 7 in response to news of high US inventories has not recovered as US inventories continued on their upward trajectory. Brent prices hovered around $ 51, higher than the low of $ 47 they had reached in mid-March; WTI remained around $ 47.

To boost market confidence, Saudi energy minister, Khalid al Falih, said on 17 March that OPEC and its associates could extend their agreement to cut production beyond 30 June if the global inventory…

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About the Author

Ambassador Talmiz Ahmed

Former Ambassador of India to Saudia Arabia, Oman and UAE, monitors developments in the West Asian region.  

Ambassador Talmiz Ahmad joined the Indian Foreign Service in 1974. Early in his career, he was posted in a number of West Asian countries such as Kuwait, Iraq and Yemen and later, between 1987 and 1990, he was Consul General in Jeddah. He also held positions in the Indian missions in New York, London and Pretoria. He served as Indian Ambassador to Saudi Arabia (2000-03; 2010-11); Oman (2003-04), and the UAE (2007-10). He was also Additional Secretary for International Cooperation in the Ministry of Petroleum and Natural Gas in 2004-06. In July 2011, the Saudi Government conferred on him the King Abdul Aziz Medal First Class for his contribution to the promotion of Indo – Saudi relations. After retirement from the Foreign Service in 2011, he worked in the corporate sector in Dubai for three years. He is now a full-time academic and holds the Ram Sathe Chair for International Studies, Symbiosis International University. He has published three books: Reform in the Arab World: External Influences and Regional Debates (2005), Children of Abraham at War: the Clash of Messianic Militarisms (2010), and The Islamist Challenge in West Asia: Doctrinal and Political Competitions after the Arab Spring (2013). He writes and lectures frequently on Political Islam, the politics and economics of West Asia and the Indian Ocean and energy security issues.