Monthly briefing: 13 key developments in the region

23 August 2022
Iran says nuclear deal incumbent on US accepting all terms; Opec and non-Opec partners to increase oil production; Iraq struggles to form new government after latest election; Saudi economy set to grow at fastest pace in a decade

By Indrajit Sen


Iran responds to final nuclear deal proposal
Opec agrees moderate oil output increase
Iraq is struggling to end its political impasse
Turkey pivots back to the Gulf
Egypt turns into climate hotspot
Acwa Power eyes $10bn Uzbek opportunities
> Abu Dhabi's G42 sets up $10bn fund
Hill to merge with GISI
German/local team signs Egypt rail operation deal



Tehran says deal incumbent upon US accepting all terms

Iran has delivered its response to the latest draft of a potential deal proposed by the EU, calling for flexibility from the US.

A final deal to resume the implementation of the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action, could be drawing close, but remains contingent on resolving a few remaining areas of dispute.

Iran’s negotiating team has said the disagreement hinges on three remaining issues – the terms of two of which have already been orally accepted by the US, leaving just one area of dispute. Iran is also insisting that all of the terms be committed to writing. Read more

Iran’s Foreign Minister Hossein Amir-Abdollahian (second-left) meets with the International Atomic Energy Agency in Tehran in March 2022. Credit: Atta Kenare/AFP via Getty Images



Opec and partners to raise production in September

The Opec+ alliance of oil producers is set to increase oil output by a mere 100,000 barrels a day (b/d) in September, in the face of deepening fears about a global economic recession curbing crude demand.

In June, Opec+ agreed to increase its July and August crude production to 648,000 b/d.

Global benchmark Brent, which rose to almost $140 a barrel in March after Russia’s war against Ukraine began on 24 February, has given up most of its gains.

Despite the Opec+ decision to boost output by 100,000 b/d in September, Brent slipped further in August, and was trading at $95 a barrel as of 22 August. Read more


Israel and Gaza return to truce after latest violence

After three days of violence in early August that claimed the lives of 44 Palestinians, according to the Palestinian Health Ministry, Egypt has brokered a ceasefire between Israel and militants in Gaza that came into effect on 7 August.

The three-day conflict began when Israel launched targeted attacks on members of the Iran-backed Palestinian Islamic Jihad inside Gaza. Israel said it was responding to threats from the Gaza group after the arrest of one of its senior members in the West Bank.

The latest conflict was unusual in that it was not a response to any rocket or missile fire from Gaza, but a pre-emptive strike, and Hamas was not involved. 


UAE leads region in venture capital funding in 2022

Companies in the UAE raised $699m in the first half of 2022, ranking the country as the leader for venture capital financing in the Middle East and North Africa (Mena) region, according to data platform Magnitt.

The UAE was also the frontrunner in terms of deals, which grew 10 per cent in the six-month period from a year ago.

Saudi Arabia and Egypt were second and third. The kingdom attracted $584m, a more than threefold rise from the first half of 2021, on 79 deals, while Egypt funding more than doubled to $307m on 78 deals.

Investments in Bahrain surged almost eight-fold to $116m, placing the country in fourth place, followed by Tunisia, which grew a third to $36m. 


Economy set to grow at fastest pace in a decade

Saudi Arabia’s economy is set to grow at the quickest pace in a decade and will likely be one of the world’s fastest-growing economies this year, according to the IMF.

The kingdom’s GDP is forecast to expand 7.6 per cent this year after 3.2 per cent growth in 2021, the IMF affirmed in its Article IV report. Non-oil growth will increase to 4.2 per cent in 2022 before returning to its medium-term potential of 4 per cent. The Saudi economy grew 11.8 per cent in the second quarter of 2022.

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Rivals meet in effort to end impasse over government

Rival Iraqi political leaders met on 17 August in an attempt to find a way out of a 10-month deadlock over forming a new government in the country.

The meeting took place amid fears that the current impasse could turn violent, as tension runs high between opposing political blocs.

However, the Sadrist Movement, a major political group sponsored by Shiite cleric and political leader Moqtada al-Sadr, did not take part in the meeting.

After the meeting, the office of Iraq’s Prime Minister Mustafa al-Kadhimi said the attendees expressed their commitment to ending the political crisis, and did not rule out holding early elections as a means to end the standoff. Read more


Baghdad agrees to continue heavy fuel oil supply

Iraq’s government has agreed to continue supplying Lebanon’s national electricity company with heavy fuel oil for another year, Lebanon’s caretaker Prime Minister Najib Mikati has said. This will alleviate pressure on the country’s struggling power grid.

Mikati said he had made the request to Iraq’s Prime Minister Mustafa al-Kadhimi, who agreed to extend the same terms of the agreement signed last year.

In July 2021, Iraq offered the cash-strapped Lebanese government 1 million tonnes of heavy fuel oil a year in exchange for services including healthcare for Iraqi citizens.


Israel and Turkey to restore full diplomatic relations

Israel and Turkey have agreed to restore full diplomatic ties and will return ambassadors to each other’s countries after a steady improvement in relations.

Turkey issued a statement that said despite the resumption of ties, it was “not giving up the Palestinian cause”.

Once warm relations between Israel and Turkey disintegrated under President Recep Tayyip Erdogan, who has been an outspoken critic of Israel’s policies toward Palestine. Israel, in turn, has objected to Turkey’s support for Palestinian militant group Hamas, which governs the Gaza Strip. Turkey reappointed an ambassador to Israel in 2020, but full relations were not restored.


Power consumption rationed to boost currency reserves

On 11 August, Egypt’s cabinet approved a plan to ration electricity to save natural gas, which it will instead divert to the export market to generate foreign currency.

The country has suffered from an acute foreign currency shortage since Russia’s invasion of Ukraine, which pushed up global commodity prices, led to the collapse of tourism from the two countries and drove up the cost of borrowing.

Under the draft plan, shops will have to limit their use of strong lights and keep their air conditioning at no cooler than 25 degrees Celsius. Ministries and government facilities will need to turn off lighting at the end of working hours. Street lighting will also be reduced.

In July, a planned increase in power prices was postponed by six months. The prime minister said the government hoped to reduce the amount of gas used to generate electricity by 15 per cent.

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