Tag Archive | "OPEC"

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Donald Trump’s Foreign Policy: Get Tough with Saudi Arabia

Posted on 19 April 2011 by hashimilion

Donald Trump talked foreign policy Monday, slamming President Obama and Republicans for an unwillingness to “get tough with Saudi Arabia.”

“Gasoline prices are going to go to $5, $6, $7 and we don’t have anybody in Washington that calls OPEC and says, “Fellas, it’s time. It’s over. You’re not going to do it anymore,” Mr. Trump said during an appearance on “Good Morning America.”

“I’m going to look ‘em in the eye and say, “Fellas, you’ve had your fun. Your fun is over,” the real estate mogul added.

It’s the latest comment made by Mr. Trump in reference to America’s foreign policy. The potential Republican presidential candidate has called for a 25 percent tariff on Chinese goods, winning him a lot of attention as he weighs a presidential run in 2012. The New York Republican has also criticized the Chinese for manipulating their currency, saying the tactic is costing America jobs.

“They have manipulated their currency so violently towards this country, it is almost impossible for our companies to compete with Chinese companies,” Mr. Trump told CNNMoney in January.

The comment comes as Mr. Trump has surged in the polls in recent weeks. An Associated Press report notes growing support for a Trump candidacy, with supporters in New Hampshire and Iowa seriously considering backing the New York Republican.

Mr. Trump has said in the past that he plans to announce in May whether he will seek the Republican nomination. The billionaire has noted that he is willing to spend upwards of $600 million on a potential race.

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Turmoil in the Middle East: Will Saudi Arabia be Next?

Posted on 21 February 2011 by hashimilion

With the recent turmoil across North Africa and the Gulf, investors are now becoming increasingly concerned that the ‘political contagion,’ as the wave of upheaval has come to be known, may flow over into Saudi Arabia as well.

The worry is that the protests in various parts of the Arab World will embolden Saudi youths, or the minority Shiites in the east, to revolt in a similar fashion.

The country supplies about 12% of global oil production and sits on at least a fifth of the world’s oil reserves.

By being on the eastern border of the Kingdom, Bahrain is near key parts of the country’s crude reserves. Although doubtful that Saudi Arabia would be drawn into the contagion, “the fear factor could potentially force oil prices higher and leave the equity markets lower”, Gary Dugan, CIO at Emirates NBD, told CNBC.

Using information from the Energy Information Administration (EIA) for 2009: If you take of Saudi Arabia, and add to that other major oil exporters in the region that have seen turmoil in recent days, such as OPEC members Libya and Algeria, you’re looking at roughly 16% of total oil production that could be at risk. Pricing the risk premium in the current environment will prove to be a daunting guessing game for traders.

Saudi Arabia faces a problem that was a major driver of protests in Tunisia and Egypt to begin with: Youth unemployment. Data by the Central Department of Statistics & Information (CDSI) estimates that 39% of Saudis between the age of 20 and 24 were unemployed in 2009 – up from 28.5% in 2000. But in its most recent report, Saudi Banque Fransi adds that the Kingdom has an “enormous stash of oil wealth it can draw on to finance schemes to sooth popular frustrations without exerting too much strain on its budget”. Saudi Arabia held an estimated $440 billion in net foreign assets in 2010.

Amid the ongoing geopolitical instability, Dugan points out that he has seen “international investors largely retreat from the MENA markets with only hedge funds opportunistically buying local bonds at low price levels.” Emerging market equity funds had net outflows of $5.45 billion last week, according to EPFR.

Indeed, the political future of Saudi Arabia is far from certain. King Abdullah is 87 years old and has spent a lot of time abroad recently for treatment. The crown prince is an octogenarian as well, while the plan for succession is unclear. Angus Blair, head of research at Beltone Financial, told CNBC that “Saudi Arabia will not be excluded from the profound changes sweeping through the Arab world”. He also expects to see reforms through the Shura Council, which is “likely to be awarded more powers as part of a long term program of increased devolution of power”.

The cost of insuring exposure to Saudi Arabia risk for a five-year period rose 15 bps to 140 bps on Friday, according to Markit.

By Yousef Gamal El-Din

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Saudi Obsession with Iran

Posted on 07 January 2011 by hashimilion

During the past ten years, the political efforts of Saudi Arabia were focused on two issues:
Firstly, regaining Washington’s trust, friendship, alliance and protection of the Saudi regime, especially after the events of 11 September 2001, which badly affected their relationship. This objective was achieved, for after 4 years the relationship is back to normal. This was primarily due to Saudi money, which was spent generously, and the regime’s political concessions to the US at the expense of the Palestinian cause. This is in addition to America’s failure in both Iraq and Afghanistan, as well as the need for a Saudi role in the region.

Secondly, confronting Iranian influence, it seems that Saudis are very much preoccupied with Iran’s scientific and nuclear development, Iran’s regional and global growth which has reached Africa and its ability to build strong alliances with the countries of Latin America.

Saudi Arabia’s policies towards many issues such as Pakistan, Afghanistan, Iraq, Lebanon, Sudan, Yemen, Algeria, Russia, Israel and Palestine, are all determined by the priorities of the Saudi- Iranian conflict. This conflict has also badly affected the production and the pricing of oil, whereby Saudi tries to decrease Iran’s oil revenue by failing to adhere to the OPEC quota, and hence manipulating the price of oil.

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