The Organization of the Petroleum Exporting Countries (OPEC) agreed to stick to its policy of unconstrained output for another six months on Friday, setting aside warnings of a second decline in prices as some members, including Iran and Iraq, look to ramp up exports. Concluding a meeting with no apparent dissent, Saudi Arabian Oil Minister Ali al-Naimi said OPEC had rolled over its current output ceiling, marking a continuation of its strategy to maintain its production target despite a global oil glut and a decline in prices. Naimi told the Saudi-owned al-Hayat newspaper that he was “100 percent comfortable” with current supply and demand in the market, but commented, “prices are a different issue.” Naimi did not directly address a question about whether Saudi Arabia will increase investment in an effort to boost production capacity, however he said the kingdom has the ability to activate spare capacity of 1.5 million barrels per day within ninety days by moving rigs. For this part, Iraqi Oil Minister Adel Abdel Mahdi said he expects demand to rise and prices to reach $75 per barrel by the end of the year. [WSJ, Reuters, Bloomberg, 6/5/2015]
Egypt raises $1.5 billion in first international bond sale for five years
The government of Egypt conducted its first international bond sale in five years on Thursday, selling $1.5 billion of 10-year bonds at a yield of 6 percent. The sale drew more than $4.5 billion of investor orders, according to a document from lead managers. The market price of Egypt’s outstanding dollar bond maturing in 2020 reflects a pickup in economic growth. It is trading at a yield of 4.37 percent, higher than a low of 3.98 percent last December, but far lower than than a peak of 11.09 percent in June 2013. Thursday’s bond sale was arranged by BNP Paribas, Citigroup, JP Morgan, Morgan Stanley and Natixis. [Reuters, 6/5/2015]
The challenge of Egypt’s rising fecundity
Population growth in the Middle East, though higher than everywhere but sub-Saharan Africa, has been slowing thanks to falling fertility rates. But after fifty years of decline, the fertility rate in Egypt is now back up to 3.5. That is lower than in Iraq and Yemen, but above Saudi Arabia and Iran. Since infant mortality is falling and life expectancy increasing, the population will surely start growing faster. That would be “catastrophic,” says one researcher in Cairo. By 2050, the United Nations thinks Egypt could be home to up to 140 million people. Only with fewer than 55 million people would the country escape being classified as “water poor,” says Atef al-Shitany, head of family planning at the health ministry. [Economist, 6/6/2015]
IMF says cheap oil to push UAE into first fiscal deficit since 2009
The United Arab Emirates (UAE) is set to post its first fiscal deficit since 2009 because of lower oil revenues, but it can avoid any serious economic slowdown, the International Monetary Fund (IMF) said after annual consultations with UAE authorities. The UAE’s consolidated fiscal balance is expected to show a deficit of 2.3 percent of gross domestic product (GDP) in 2015, compared to a 5 percent surplus last year. The IMF said the deficit does not pose a threat to the economy and estimated that at today’s oil prices the UAE could keep spending at current levels for at least thirty to forty years by drawing on its financial reserves. [Reuters, 6/4/2015]
Also of interest
Saudi Arabia raises benchmark oil price to Asia | Reuters
Iraq Oil Minister says unity most important for OPEC | Bloomberg
Iraqi Kurdistan crude flow to Turkey at 650,000 bpd, including SOMO allocation | Reuters
Egypt’s EFG-Hermes plans Saudi Islamic fund as market opens up | Reuters
Egypt signs $300 million deal to produce high-octane benzene | Reuters
Egypt’s budget deficit soars to 9.9 percent of GDP in ten months | Cairo Post
Egyptian SMEs export revenues up $17 million through USAID program | Cairo Post
President of World Bank Group to visit Egypt | Cairo Post
Morocco’s economic growth falls to 2.4 percent in 2014 | Morocco World News
Algeria, EU sign funding agreement in several sectors | Algerie Presse Service
In a violent Mideast, economic growth is vital (opinion) | The Daily Star