Monthly briefing: 13 key developments in the region

26 July 2022
US president meets Saudi crown prince; Agreements signed between UAE and France; Tehran hosts summit for leaders of Iran, Russia and Turkiye; Russia’s Rosatom breaks ground on Egypt’s first nuclear plant

By Indrajit Sen

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Riyadh upholds Opec+ oil pact before Biden
Biden trip clears ground for Saudi-Egypt causeway
Opec+ adheres to planned oil output increase
Adnoc and TotalEnergies sign key agreement
NPCC and Technip Energies establish joint venture
Iran and Russia energy companies sign $40bn MoU
> Rosatom obtains Egypt nuclear permit
Kuwait appoints new prime minister​​​​​
Oman buys back international debt
Sami signs deals at Farnborough airshow
Abu Dhabi tenders waste-to-energy plant

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US-SAUDI TIES

US president meets Saudi crown prince

US President Joe Biden completed a four-day tour of the Middle East, which started with visits to Israel, Palestine and Saudi Arabia.

Biden met with Crown Prince Mohammed bin Salman during his trip to Saudi Arabia. Agreements were signed in Jeddah for the two countries to cooperate on projects including 5G networks, enhanced cybersecurity, space exploration and public health.

The two countries also took steps to enhance Middle East security, with Biden reaffirming the US’ commitment to help Saudi Arabia defend itself from external attacks, particularly those launched by the Iran-backed Houthis in Yemen. Read more

US President Joe Biden met Saudi Arabia’s Crown Prince Mohammed bin Salman at Alsalam Royal Palace in Jeddah on 15 July 2022. Credit: Royal Court of Saudi Arabia/Anadolu Agency via Getty Images

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OIL

Oil prices remain high despite more production

The Opec+ alliance of oil producers has decided to stick to a planned production increase of 648,000 barrels a day in August. The decision came as major global consumers urged the group to pump more oil to rein in high oil prices.

Oil prices have remained over $100 a barrel, however, as supply scarcity concerns outweigh recessionary fears. The oil market is running on thin spare capacity of both crude and oil products.

At 12.30pm on 26 July, Brent crude was trading at $106.8 a barrel, having made gains in trading during the morning.

Meanwhile, Saudi Arabia told US President Joe Biden that it would not unilaterally increase production, and that any such decision would be taken according to market dynamics and within the Opec+ framework. Read more


ECONOMY

High oil and gas prices to lift economic growth in the Gulf

High oil and gas prices will further support GCC countries’ economic growth during the rest of this year and into 2023, bolstering a steady recovery from the Covid-19 pandemic, according to global audit and consultancy firm KPMG.

Although energy prices are unlikely to remain at current levels long-term – given that the spike partly reflects supply constraints owing to sanctions imposed on Russia – they are likely to stay elevated in 2022.

Private sector activity in the GCC, improving after the easing of Covid-19-related restrictions, will further benefit from elevated international energy prices, KPMG said.

Business activity in the non-oil private sector economies of Saudi Arabia and the UAE, the two biggest GCC economies, has continued to improve as output and new orders increase amid rising optimism about future growth, despite mounting inflationary pressures.


UAE

Key agreements signed between UAE and France

The UAE and France have signed several agreements in the fields of energy, peace and stability, food, economy and investment, climate change, healthcare, education, culture and space research. The deals were signed in Paris during a visit by UAE President Sheikh Mohamed bin Zayed al-Nahyan.

The two countries also aim to identify joint investment projects in France, the UAE or elsewhere in the hydrogen, renewable and nuclear energy sectors.

An agreement between Abu Dhabi National Oil Company (Adnoc) and TotalEnergies to explore opportunities in areas such as gas growth, carbon capture and product supply was one of the deals signed. Read more


IRAQ

Relationship worsens between Iraq and Turkiye

Iraqi Prime Minister Mustafa al-Kadhimi issued a warning to Turkiye for its alleged attack on a tourist resort in Dohuk in the semi-autonomous Kurdish region of Iraq.

Iraq reserves the right to retaliate against the attack in which at least nine people were killed and two dozen were injured, Al-Kadhimi told Turkiye.

The attack also drew widespread international condemnation.

Separately, Iraq and the US have agreed to increase security ties in order to eliminate a potential return of the Islamic State in Iraq and Syria (Isis). The agreement was announced after talks between US President Joe Biden and Iraq’s Al-Kadhimi in Jeddah, during a summit of leaders from the US, the GCC, Iraq, Egypt and Jordan.

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IRAN

Tehran hosts summit for leaders of Iran, Russia and Turkiye

Iranian President Ebrahim Raisi, Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin met in Tehran at a trilateral summit, primarily to discuss the situation in Syria.

This was the first major summit outside Russia that Putin has participated in since the start of Russian military aggression against Ukraine.

During the summit, Raisi reportedly endorsed Putin for his defiance of Nato, and Russia clashed with Turkiye over Syria, where the two countries have divergent interests.

In addition, while Putin was visiting Tehran for the summit, National Iranian Oil Company and Russian energy producer Gazprom inked a memorandum of understanding (MoU) for the development of several energy projects in Iran. The MoU is worth about $40bn. Read more


EGYPT

Rosatom breaks ground on Egypt’s first nuclear plant

Russia’s state-owned nuclear energy company Rosatom has broken ground on its $30bn nuclear power station in the desert on Egypt’s Mediterranean coastline.

Rosatom has laid the concrete foundations for the Al-Dabaa nuclear power plant, which will be Egypt’s first.

The nuclear complex highlights Cairo’s growing ties to Moscow, which entail multibillion-dollar arms purchases, Russian investment, frequent joint war exercises and the import of Russian wheat.


LEBANON

Private sector businesses increase activity in Lebanon

Lebanon’s private sector activity has improved in recent months, reaching the highest level since January 2016 on the back of slower declines in output and new orders. Employment has also risen at its fastest pace since February 2018.

The Blom Lebanon Purchasing Managers’ Index rose to 49.1 in June, from 48.6 in May, marking the highest reading recorded in more than six years. It remained below the 50 mark that separates growth from contraction, however.

Lebanon’s economy collapsed after it defaulted on about $31bn of eurobonds in March 2020, with its currency sinking more than 90 per cent against the US dollar on the black market.


YEMEN

UN works to extend truce between warring parties

The UN Special Envoy for Yemen, Hans Grundberg, has intensified efforts towards full implementation of the truce in Yemen and is exploring possibilities for extending it.

An extended and expanded truce will increase the benefits to the Yemeni people, the UN said.

It will also provide a platform to build more confidence between the parties and start serious discussions on economic priorities, particularly on revenues and salaries, as well as on security priorities, including a ceasefire, Grundberg added.

Yemen’s warring parties entered a two-month ceasefire brokered by the UN on 2 April. This was then extended for another two months on 2 June.

Grundberg said that the truce has largely held for almost four months, marking the longest period of relative calm in more than seven years and a significant decrease in the number of civilian casualties.


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