CAIRO: The Egyptian pound strengthened slightly against the US dollar on Monday, after a nearly 2 percent rise on Sunday, and bankers attributed the increase to central bank intervention.
The pound was trading at 17.68 to the dollar at midday on Monday, up from 17.75 pounds on Sunday. The pound had previously traded at around 17.95 to the dollar.
The pound strengthened on Sunday to as high as 17.6 to the dollar before stabilising at around 17.75.
“The strengthening of the Egyptian pound is worrying and orchestrated,” said one official at a private bank in Egypt. “It has nothing to do with supply and demand.”
The central bank governor, Tarek Amer, did not respond to requests by Reuters for a comment.
The pound has not been this strong against the dollar since May 2018, according to Refinitiv data.
Amer told Bloomberg last week he expected to see a more volatile pound after Egypt ended a foreign exchange repatriation mechanism in December.
“Some fluctuations in local currency prices against the dollar were expected after ending the repatriation mechanism,” said Mohamed Abu Basha, EFG Hermes’ head of macroeconomic analysis.
“We have seen large foreign inflows at the end of last week into the debt instruments market.”
The repatriation mechanism had been put in place in March 2013 when confidence in Egypt’s ability to provide foreign currency was cutting into investment inflows.
Economists have said that terminating the mechanism would lead overseas investors to channel funds through the banking system instead of the central bank, making banks more liquid in foreign currency but also potentially causing the exchange rate to be more volatile.
But ending the mechanism and an increase in the customs exchange rate did not have an effect on the pound as expected, said one banker at an Egyptian state bank, who asked not to be named.
“So it was necessary to send a message that the market depends on supply and demand, which is what we saw yesterday,” he said referencing the strengthening of the pound seen on Sunday.
Egypt devalued its currency in 2016 as part of a three-year $12 billion IMF loan deal.
Economic reforms aimed at attracting investors who fled during the 2011 uprising, have also included new taxes and deep cuts to energy subsidies, putting the budgets of tens of millions of Egyptians under strain.
Bankers see central bank behind surprise rise of Egyptian pound
Bankers see central bank behind surprise rise of Egyptian pound
- The pound was trading at 17.68 to the dollar at midday on Monday, up from 17.75 pounds on Sunday
- The pound has not been this strong against the dollar since May 2018
Saudi Arabia reshapes workforce with surge in talent mobility solutions
- Talent mobility services are emerging as a pivotal force in reshaping Kingdom’s employment landscape
RIYADH: As Saudi Arabia pushes forward with its Vision 2030 transformation agenda, talent mobility services are emerging as a pivotal force in reshaping the Kingdom’s employment landscape — streamlining transitions, boosting retention, and aligning workforce development with national diversification goals.
From artificial intelligence-powered human resource platforms to targeted upskilling programs and strategic internal marketplaces, both private firms and public initiatives are facilitating dynamic career transitions. These interventions are not only transforming the experience of work in Saudi Arabia but also supporting businesses in building a more agile, tech-enabled, and future-ready workforce.
A shift toward internal agility
As the labor market evolves, the focus has moved from external recruitment to creating an internally sustainable talent ecosystem. According to Francesco Cotrone, partner at Arthur D. Little, providers are enabling this transformation by deploying tools such as internal job marketplaces, AI-driven role matching systems, and strategic workforce planning platforms.
“These technologies not only give employees visibility into internal opportunities but also match them to roles based on both current capabilities and future potential,” he said.
The result is a shift away from static, linear career paths toward more flexible, opportunity-rich trajectories. This is particularly critical in fast-growing sectors such as logistics, tourism, and ICT, where the ability to reskill and redeploy talent quickly has become a competitive differentiator.
Cotrone cited Taqat, a leading domestic talent mobility service provider, as a prime example. The company’s employee transition program assesses individual skills and delivers customized training to support career moves across industries.
“As it works to connect skilled workers with employers in high-demand sectors such as technology and healthcare, Taqat facilitates seamless transitions, enhances career opportunities, and addresses critical skill shortages in the evolving job market,” he added.
Navigating compliance and change
Saudi Arabia’s workforce is also being shaped by demographic and regulatory dynamics. Abeer Al-Husseini, partner at Fragomen, noted that by the end of 2024, the Kingdom’s foreign workforce had grown to over 13.6 million, marking a 13.3 percent year-on-year increase and a 33.4 percent jump since 2019.
“In this environment, mobility providers are essential in helping businesses navigate regulatory frameworks such as Saudization policies under the Nitaqat program, sector-specific quotas, and compliance obligations set by the Ministry of Human Resources and Social Development,” Al-Husseini said.
These services often manage interactions with multiple government platforms — such as Qiwa and GOSI — while enabling fast, compliant transitions across functions and sectors. This reduces administrative friction and helps ensure continuity amid shifting business conditions.
She emphasized that talent mobility providers not only facilitate expatriate integration but are also playing a vital role in embedding Saudi nationals into the private sector. By supporting strategic workforce planning and Saudization targets, these providers align with national human capital development priorities.
From recruitment to retention
Modern mobility is no longer just about hiring — it’s about mapping skills, identifying gaps, and supporting long-term workforce evolution. Faisal Al-Sarraj, KSA deputy country leader and consulting clients and markets leader at PwC Middle East, underscored the value of internal talent marketplaces — digital tools that align employee skills and interests with internal opportunities.
“As Saudi Arabia continues to advance under Vision 2030, organizations need to be proactive in building teams with the needed market skills. Talent mobility helps with this by upskilling and cross-training existing employees,” Al-Sarraj told Arab News.
He acknowledged that while external hiring remains necessary for certain critical roles, internal mobility is gaining ground as a strategy for boosting retention and responsiveness.
Mobility providers are essential in helping businesses navigate regulatory frameworks, sector-specific quotas, and compliance obligations.
Abeer Al-Husseini, partner at Fragomen
“Providers also help organizations shift from reactive hiring to proactive workforce planning. By using advanced tools, they help companies forecast what skills will be needed in the future and develop strategies to reskill employees. Providers like Mercer, Adecco, Bayt, and Naseej are doing an excellent job in this space,” he said.
Serge Eid, a member of Bain & Co.’s Public Sector practice, noted that providers are extending their services beyond hiring logistics to include skilling initiatives and regional talent deployment — key factors for scaling in emerging sectors.
“This support has become increasingly critical as businesses look to scale quickly, pivot into new sectors, or access regional talent pools,” Eid said. “They also support Vision 2030’s broader push for a more dynamic and globally integrated labor market.”
AI and reskilling for career growth
Mobility providers are increasingly focusing on reskilling and internal progression through AI-driven tools that align employee growth with business and national objectives.
Cotrone highlighted the growing need for new roles such as AI specialists and data analysts, which are being addressed through targeted training programs.
Importantly, these services enhance retention by making career development tangible.
Francesco Cotronei, partner at Arthur D. Little
“Importantly, these services enhance retention by making career development tangible. Companies that offer clear growth pathways, mentoring, and internal mobility opportunities are not only accelerating role fulfillment. They’re also building employee loyalty, engagement, and hence, retention,” he said.
Al-Husseini added that talent mobility providers help businesses reimagine career paths as technology and regulations evolve.
PwC’s Al-Sarraj cited platforms such as Pymetrics, Fuel50, and Cornerstone OnDemand that offer employees AI-powered tools to map career journeys and personalize upskilling efforts.
He referenced a recent collaboration between Education for Employment Saudi Arabia and Agility, which launched a program using AI tools to help young job seekers tailor their applications and navigate the job market.
These efforts not only fill capability gaps but also signal long-term investment in people.
Serge Eid, member of Bain & Co.’s public sector practice
“This is a perfect example of how talent mobility can help not just in employee transitions but also in creating a workforce that’s future-ready,” Al-Sarraj noted.
Eid added that such investments in internal mobility signal long-term commitment to employee growth, improving loyalty and performance.
“These efforts not only fill capability gaps but also signal long-term investment in people, which in turn drives loyalty, higher engagement, and better performance,” he said.
Strategic drivers for 2025 and beyond
Looking ahead, talent mobility is poised to become a central driver of workforce strategy in Saudi Arabia. Cotrone expects key trends to include personalized, experience-rich career paths and an increasing demand for data analytics literacy.
“Talent mobility providers will increasingly act as strategic partners, helping organizations create adaptive, future-proof talent ecosystems,” he said.
He added: “Talent mobility will be recognized not just as a business advantage but as a profound national imperative. As organizations invest in intelligent, internally driven workforce systems, they will unlock new pathways for growth and ensure that Saudi talent remains competitive, empowered, and at the heart of the Kingdom’s cross-sectoral transformation journey.”
Al-Husseini projected that companies would require rapid, compliant deployment solutions as sectors like healthcare, tourism, and tech expand. At the same time, local workforce development will become a priority, with providers playing a key role in integrating Saudi talent through internal mobility frameworks and reskilling for leadership roles.
She also pointed to the rise of hybrid and remote work, particularly in sustainability-related “green jobs,” requiring providers to support flexible, compliant mobility strategies.
PwC’s Al-Sarraj emphasized the growing role of predictive workforce planning, enabled by real-time data analytics.
“The alignment between workforce mobility and national upskilling initiatives will also be a major trend,” he said. He highlighted initiatives like Wa3d, which aims to provide 3 million training opportunities, and the Skills Accelerator, targeting 300,000 placements in emerging fields.
“Talent mobility providers will connect these initiatives to real job opportunities, ensuring that individuals gain the right skills and can apply them directly in the workforce,” he said.
He also cited the Ministry of Human Resources and Social Development’s Skills Taxonomy — a tool to align labor capabilities with evolving job demands. Cross-sector mobility, especially in digital health and green energy, is expected to play a vital role.
“Talent mobility providers will drive transitions, helping build a skilled, adaptable workforce essential to realizing Saudi Arabia’s Vision 2030 and sustaining long-term growth,” he added.
From Bain & Co.’s standpoint, Eid believes mobility will evolve into a strategic lever rather than just an operational function.
“AI-led workforce planning, demand forecasting, and personalized career pathways will increasingly inform mobility decisions,” he said. “Organizations that view mobility as part of a broader talent strategy will likely be better positioned to navigate future workforce shifts and build resilience in a rapidly changing environment.”
MENA funding rounds, expansions continue
- Strong momentum in funding follows the trend observed in May
RIYADH: The Middle East and North Africa witnessed several funding rounds for startups in the past week, with firms across multiple industries eyeing geographical expansion.
The strong momentum in funding follows the trend observed in May, when startups throughout the region secured $289 million across 44 deals, marking a 25 percent rise from April and a 2 percent increase year on year.
In the past week, most of the fundraising rounds happened in the technological sector, an indication of the region’s evolving digital landscape.
Payrails raises $32 million
Berlin-based payment software company Payrails has raised $32 million in a Series A funding round led by HV Capital’s Growth Fund, with strong participation from existing investors EQT Ventures, General Catalyst, and Andreessen Horowitz, bringing total funding raised to over $52.8 million.
In a press statement, the company said that the fresh funding is expected to support the company’s product innovation, product roadmap expansion, and commercial growth across Europe and the MENA region.
“We are grateful for the trust our customers and investors have placed in us. Their continued support fuels our vision of empowering enterprises with an all-in-one platform to manage every aspect of payments, unlocking new levels of performance and innovation while driving down complexity and costs,” said Orkhan Abdullayev, co-founder and CEO of Payrails.
“With this funding, we are doubling down on product development to expand our multi-product platform across the entire payment lifecycle. Our payment operating system is setting a new industry standard for how enterprises manage and optimize payments,” he added.
With the fresh capital, Payrails will also expand its all-in-one platform with new products across the payment lifecycle, from acceptance to payouts.
Qanooni raises $2m to transform workflows
UAE-based legal startup Qanooni has raised $2 million in a pre-seeding funding round led by Village Global, Salica Investments, TA Ventures, and several angel investors.
With the new financial assistance, the company seeks to support its team expansion and operations in the UAE and the UK. Through the funding, Qanooni also aims to further modernize legal operations by introducing a range of new tools, including end-to-end agentic workflows and deeper platform customization.
Founded by Anuscha Iqbal, Ziyaad Ahmed, and Karim Shiyab, the company integrates directly into the software that lawyers mainly use during work, eliminating the friction of switching platforms or adopting new workflows.
The tools offered by Qanooni help law companies draft and produce documents faster and more accurately, while also making use of generative artificial intelligence that mimics a lawyer’s tone and writing style, which complies with international standards.
Hydrogen Utopia raises $339,000
UK-based Hydrogen Utopia raised $339,000 to expand its waste-to-hydrogen technology in the MENA region.
Using the fund, the company plans to buy 10 exclusive licenses that give it the right to use InEnTec’s waste-to-hydrogen technology, which will help the firm carry out its operations in the region.
Founded by Aleksandra Binkowska, the company specializes in transforming non-recyclable mixed waste plastic into hydrogen and other emission-free energy sources.
Salus Cloud raises $3.7m in expansion push
Salus Cloud, an African-based AI-native DevOps platform, raised $3.7 million in seed funding to scale its operations across the Middle East and Africa.
The fund round was led by Atlantica Ventures and P1 Ventures, while it also witnessed the participation of Idris Bello of Lofty Inc. Capital and angel investor Timothy Chen of Essence VC.
Through the funding, the company aims to address a crucial issue in the world of technology, including access to secure, automated software deployment tools.
With the newly acquired financial assistance, Salus also plans to support its customer base growth across Africa, the Middle East, and underserved tech ecosystems, as well as build partnerships with developer communities and tech hubs.
VenueX raises $1.2 million
VenueX, an Istanbul-based AI startup, closed a $1.2 million bridge investment round, led by Singapore-based Orbit Startups. The investment is expected to support the company’s aim to expand its operations to Saudi Arabia and the UAE.
VenueX is also planning to expand its presence in Dubai and Riyadh with new offices, while also creating a sales team in both cities. Founded in 2022, VenueX enables retail brands to manage their digital advertising on all platforms through a unified interface.
Orange Middle East and Africa partners with risingSUD
Multi-service operator Orange Middle East and Africa has signed a strategic partnership agreement with risingSUD to support the establishment and growth of African start-ups in the Orange Digital Center network in the Provence-Alpes-Cote d’Azur region, in the south of France.
RisingSUD is the economic development agency in charge of attracting projects, investment, and talent to the area.
According to a press statement, the three-year partnership aims to bring together innovation ecosystems in Africa, the Middle East, and the South of France.
With this partnership, OMEA strengthens its support for the internationalization of start-ups from Africa and the Middle East and reaffirms its commitment to developing the continent’s entrepreneurial ecosystems.
The partnership will also allow more start-ups from MEA to benefit from risingSUD’s expertise, ranging from project development to access to financing and networking with international partners.
“By facilitating their establishment and acceleration in France, particularly in the south region, we are giving young African companies the means to accelerate their growth,” said Jerome Henique, CEO of Orange Middle East and Africa.
“This partnership opens up new economic opportunities and constitutes a real springboard for the development of businesses on both sides of the Mediterranean,” said Bernard Kleynhoff, president of risingSUD and president of the Economic and Digital Development, Industry, Export, Attractiveness and Cybersecurity Commissions of the Sud Region.
Analysis: Could Israeli strikes on Iran revive specter of $100 oil?
- Crude oil caught between escalation pressures and supply shortage scenarios as prices surge
LONDON: Energy and oil market analysts, speaking to Independent Arabia, unanimously described the surprise Israeli military strikes on Iranian targets as creating an “instantaneous market shock.”
Amid escalating geopolitical tensions, the latest military confrontations between Israel and Iran are propelling crude oil prices into dramatic territory, rekindling fears of energy crises that have historically destabilized global markets.
This unprecedented escalation sparks immediate questions about energy market disruptions, petroleum price movements, and short-term risk premium adjustments — including the possibility of crude breaching the $100 per barrel threshold.
Conversely, with reports confirming that Iranian oil refining and storage facilities remained undamaged, this factor may help cushion the shock to global petroleum markets.
Crisis background and market impact
These significant developments emerge precisely as markets were starting to digest the International Energy Agency’s “Global Energy Review 2025,” which forecast a deceleration in oil demand growth stemming from the worldwide shift toward renewable energy and electric vehicle adoption.
However, Israeli attacks on Iran’s Natanz nuclear facility and additional military targets have completely reversed these projections, aggressively thrusting supply disruption concerns and price escalation back into the spotlight.
Analysts portrayed the strike as “converting the Iranian standoff from a political matter into actual combat,” propelling oil prices higher by 7 percent to 13 percent in the steepest single-session increase since March 2022. Subsequently, Brent crude exceeded $78 per barrel as West Texas Intermediate advanced past $73.
International warnings and notable statements
These incidents align with global warnings and prominent declarations from US President Donald Trump, who acknowledged that the American leadership possessed advance intelligence about Israeli attacks on Iran, while stressing Washington’s detachment from the operations.
Trump cautioned Tehran about its nuclear ambitions, declaring: “We will not allow Iran to possess nuclear weapons... but we do not want a new war in the Middle East.”
Such pronouncements intensify the complexity of circumstances, revealing that Washington maintains vigilant oversight, while seeking to circumvent direct participation in hostilities that could trigger catastrophic repercussions for the world economy.
Throughout history, the Iranian matter has remained among the most convoluted subjects in global politics, where atomic weapon concerns merge with financial and geopolitical calculations.
Momentary shock or open conflict?
Energy and oil market analysts, speaking to Independent Arabia, unanimously described the surprise Israeli military strikes on Iranian targets as creating an “instantaneous market shock,” heightening concerns that current tensions might spiral into full-scale warfare in one of the globe’s most critical oil-producing areas.
Industry experts verified that crude price movements in the upcoming phase will hinge on three primary elements: Tehran’s likely retaliation strategy, major powers’ diplomatic stances, and whether military activities persist in the short and intermediate timeframes.
Market analysts pointed out that dramatic price spikes mainly represent “uncertainty premiums” tied to geopolitical instability, which could stay heightened while hostilities continue. This premium constitutes the additional cost petroleum purchasers bear to hedge against possible supply interruptions.
They observed that escalating geopolitical threats result in increased uncertainty premiums, pushing prices higher despite the absence of real supply constraints.
Although undamaged Iranian oil processing and storage infrastructure serves as a significant stabilizing element, analysts contend that direct strikes on Iranian petroleum facilities would have triggered instant supply cuts, accelerating prices to substantially higher territory.
They stressed that present price rises reflect anticipated future threats rather than genuine supply deficits thus far, offering the market some operational room. Put differently, the market currently confronts the prospect of oil supply interruptions rather than actual losses, constraining the scale of price increases that would have occurred had petroleum installations been specifically attacked.
Reciprocal attacks
Petroleum sector expert Kamel Al-Harami considers it challenging to forecast precise oil price targets amid present conditions, citing the potential for Middle Eastern warfare or Iranian supply interruptions affecting global markets in Asia, particularly China, India, and Japan.
Al-Harami observed that although OPEC maintains spare capacity surpassing 5 million barrels per day, crude prices jumped $7 within a 24-hour period, hitting $73 per barrel. He characterized this surge as merely the initial phase of additional gains, speculating whether values might climb to $80 or potentially $90 per barrel.
Al-Harami noted that any pricing above $65 per barrel would favor American shale operations and stimulate enhanced sector investment. He underscored that greater increases would arise from expanding warfare consequences and mutual attacks between Israel and Iran, potentially encompassing other Gulf Arab countries, thus “commencing the actual calamity.”
Strong blow to sentiment
IG market specialist Tony Sycamore described the escalation as “a major hit to market confidence” throughout financial sectors generally, not limited to energy trading, forecasting significant capital flight from risk investments by week’s close. He observed that market participants are watching for “potential Iranian reprisals,” which might shape trading patterns in upcoming sessions.
Supply concerns
Strategic analyst at Pepperstone Ahmed Aseeri explained that current price increases reflect a combination of immediate supply concerns and expectations of gradually escalating tensions, unlike previous Iran-Israel tension rounds that usually ended quickly or through international containment pressures.
Contagion spread
Phillip Nova Singapore market analyst Priyanka Sachdeva verified that Iran’s preparation for military reprisals amplifies dangers, extending beyond supply interruptions to include prospects of geopolitical spillover affecting neighboring oil-producing nations, possibly driving crude prices back to heights not witnessed in 10 years.
Production disruption
Lipow Oil Associates President Andy Lipow outlined that crude prices might surpass $100 per barrel should any Gulf petroleum production installations face disruption, although he emphasized the baseline projection presumes leading nations will work to limit escalation and avoid further deterioration.
Major doubts
XM Australia’s CEO Peter McGuire depicted “Israeli-Iranian conflicts” as producing “considerable anxiety” spurring market fluctuations, explaining that oil values react predominantly to imminent supply vulnerabilities compared with other elements.
Price projections
Natasha Kaneva, JPMorgan’s global commodities strategy chief, projected possible price crests at $120, though she balanced this by saying that markets could tumble to $40 if additional supplies materialize and demand weakens. Geopolitics maintains its dominance.
Broader conflict and worst scenario
JPMorgan detailed in a latest research analysis that the gravest outcome entails possible hostilities spreading to encompass oil supply interruptions from surrounding states, including endangering maritime transit via the Strait of Hormuz.
JPMorgan specified that this hard-line possibility holds approximately 7 percent likelihood, implying prices might achieve “explosive” growth propelled by international market alarm if the area deteriorates into extensive conflict.
Despite such warnings, the bank retained fundamental projections for Brent petroleum in the 60s per barrel territory for the remainder of 2025, expecting area and worldwide powers to suppress escalation, followed by approximately $60 in 2026.
Future scenarios
As regional geopolitical strain escalates, market observers concentrate on potential developments that might determine global crude price directions. If leading powers including the US and EU intervene to ease hostilities and forestall military reprisals between Iran and Israel, prices would likely diminish progressively toward pre-tension benchmarks. This pathway hinges on diplomatic effectiveness and immediate crisis management, which JPMorgan endorses in its fundamental outlook.
Alternatively, if Iran strikes back forcefully or hostilities broaden to encompass Iranian oil installations or Strait of Hormuz transit, petroleum prices could climb beyond $100-120 per barrel within global energy market pandemonium. This scenario might worsen should obstruction of the Strait of Hormuz happen, which JPMorgan characterized as the direst possibility, cited by Andy Lipow and Priyanka Sachdeva as realistic.
Three key factors to monitor
Against this backdrop of tensions, markets demonstrate limited potential for immediate calm, particularly as the Iranian challenge represents one of the most convoluted international political crises spanning over two decades. While investors endeavor to absorb ongoing developments, the short-range objective involves “stability” over inflated values. Hence, three principal indicators should be watched to determine pricing patterns:
First, Iran’s response style: Will it remain token or threaten supply continuity? Analysts regard Tehran’s reaction approach as the decisive factor influencing market trends in coming days.
Second, global powers’ effectiveness: Will they manage to shield the area from regional conflict? International mediation efforts need to serve crucial roles in limiting escalation and preventing progression toward wider confrontation.
Third, futures trading patterns: Do they demonstrate “sustained crisis” or “momentary surge” characteristics? Oil derivative contracts will deliver clear indications of market projections for extended timeframes. If pricing sustains long-term increases, this signals markets foresee continuing instability; if levels stabilize, this reflects perception of current turbulence as fleeting.
Broadly speaking, geopolitical dynamics will maintain control over petroleum markets in the near future, but if balance fails, effects will reach beyond energy to global price indices and economic development, with possible return to $100 pricing, potentially shadowing the entire world economy.
Oil settles up 7% as Israel, Iran trade air strikes
- Israel said it had targeted Iran's nuclear facilities, ballistic missile factories and military commanders on Friday
HOUSTON: Oil prices jumped on Friday and settled 7 percent higher as Israel and Iran traded air strikes, feeding investor worries that the combat could widely disrupt oil exports from the Middle East.
Brent crude futures settled at $74.23 a barrel, up $4.87, or 7.02%, after earlier soaring over 13% to an intraday high of $78.50, the strongest level since January 27. Brent was 12.5% higher than a week ago.
US West Texas Intermediate crude finished at $72.98 a barrel, up $4.94, or 7.62%. During the session, WTI jumped over 14% to its highest since January 21 at $77.62. WTI climbed 13% to its level a week ago.
Both benchmarks had their largest intraday moves since 2022 when Russia's invasion of Ukraine caused a spike in energy prices.
Israel said it had targeted Iran's nuclear facilities, ballistic missile factories and military commanders on Friday at the start of what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon. Iran has promised a harsh response.
Shortly after trading ended on Friday, Iranian missiles hit buildings in Tel Aviv, Israel, according to multiple media reports. Explosions were also heard in southern Israel.
US President Donald Trump urged Iran to make a deal over its nuclear program to put an end to the "next already planned attacks."
The National Iranian Oil Refining and Distribution Company said oil refining and storage facilities had not been damaged and continued to operate.
Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), currently produces around 3.3 million barrels per day (bpd), and exports over 2 million bpd of oil and fuel. Spare capacity among OPEC and its allies, including Russia, to pump more oil to offset any disruption is roughly equivalent to Iran's output, according to analysts and OPEC watchers.
The latest developments have also stoked concerns about disruptions to the Strait of Hormuz, a vital shipping passage.
"Saudi Arabia, Kuwait, Iraq and Iran are wholly locked into one tiny passage for exports," said Rabobank in a note, regarding the Strait.
About a fifth of the world's total oil consumption passes through the strait, or some 18 to 19 million barrels per day (bpd) of oil, condensate and fuel.
"Israeli action has so far avoided Iranian energy infrastructure, including Kharg Island, the terminal responsible for an estimated 90% of Iran’s crude oil exports," said
Ben Hoff, head of commodity research at Societe Generale.
"This raises the possibility that any further escalation could follow an 'energy-for-energy' logic where an attack on one side’s oil infrastructure might invite a retaliatory strike on the other’s," Hoff said.
Iran could pay a heavy price for blockage of the Strait of Hormuz, analysts said on Friday.
"Iran's economy heavily relies on the free passage of goods and vessels through the seaway, as its oil exports are entirely sea-based. Finally, cutting off the Strait of Hormuz would be counterproductive to Iran's relationship with its sole oil customer, China, said analysts with JP Morgan.
Money managers raised their net long U.S. crude futures and options positions in the week to June 10, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The speculator group raise its combined futures and options position in New York and London by 15,157 contracts to 121,911 during the period.
Baker Hughes said the number of U.S. oil and natural gas rigs fell for seventh week in a row with the total count down by 35 rigs or 6% below this time last year.
The oil rig count fell by three to 439 this week, its lowest since October 2021, while gas rigs slipped by one to 113.
In other markets, stocks dived and there was a rush to safe havens such as gold, the U.S. dollar and Swiss franc.
IMF-backed tariff reforms raise concerns for Pakistan’s auto industry despite rising car sales
- Government aims to cut overall tariffs by 4% over five years to promote export-led growth
- Industry stakeholders warn removing regulatory duties could hurt local manufacturers
KARACHI: While Pakistan’s automobile manufacturers are still parsing the government’s new financial plan, industry experts on Friday said proposed International Monetary Fund (IMF)-mandated reforms, such as the rationalization of trade tariffs, could erode long-standing protections for local industry.
Finance Minister Muhammad Aurangzeb said the government plans to reduce the overall tariff regime by more than four percent over the next five years to steer the country toward an export-led growth model in line with the IMF program.
Under the National Tariff Policy 2025-30, the government aims to abolish additional customs duties (ACDs), regulatory duties (RDs) and provisions under the Fifth Schedule of the Customs Act, 1969. The goal is to simplify Pakistan’s tariff structure by reducing it to four duty slabs ranging from 0 to 15%.
The IMF-backed reforms are expected to lower Pakistan’s weighted average tariff by 3.2% points to 7.4%, said Shafiq Ahmed Shaikh, an automobile industry expert and former general manager of Pak Suzuki Motor Company Ltd.
“These tariff cuts will reduce protection to the auto industry along with reduction of the cost of vehicles,” he said. “It is a very sensitive point for industry… [and] must be discussed with the stakeholders for good, long-term and acceptable solutions.”
PARA-TARIFFS
Abdul Waheed Khan, spokesperson for the Pakistan Automotive Manufacturers Association (PAMA), said regulatory duties are designed to protect local industry and discourage unnecessary imports.
“The ACD too should gradually be abolished because such para-tariffs are not good,” he told Arab News.
Para-tariffs are taxes and duties levied in addition to standard customs tariffs, such as ACDs and RDs. While often introduced to curb imports or raise revenues, they are controversial because they can create complexity, raise costs and distort trade policy.
Pakistan’s federal budget also proposes raising the sales tax on 850cc small vehicles to 18% to bring parity between petrol or diesel-powered cars and hybrids.
“This would increase the cost of vehicles for middle income groups,” said Khan of PAMA, which represents the local operations of Honda, Suzuki, Toyota and 16 other manufacturers.
“This is not good for our Made-in-Pakistan policy as small vehicles will go costlier at a time when people’s disposable incomes are already not so good,” he continued, declining further comment on the budget.
CARBON LEVY
Pakistan’s automobile market, long dominated by Japanese firms like Honda, Toyota and Suzuki, has recently seen new entrants, particularly Chinese and Korean electric vehicle (EV) manufacturers like BYD, SAIC and Kia, operating through joint ventures.
“The existing industry will face good competition from EV and as we know, the future is of Electric Vehicles specially from China,” Shaikh, the automobile industry expert, told Arab News.
As one of the countries most affected by climate change, Pakistan also plans to introduce a carbon levy of up to Rs10 ($0.04) per liter on petrol, diesel and furnace oil over the next two years.
The move is intended “to discourage excessive use of fossil fuels and provide financial resources for climate change and green energy programs,” Finance Minister Aurangzeb said in his budget speech earlier this week.
Shaikh dismissed suggestions that the levy would raise car prices, arguing that consumers would instead begin shifting to EVs.
Prime Minister Shehbaz Sharif also announced plans to impose differential taxes on the sale and import of vehicles based on engine size to promote the adoption of two- and three-wheeled EVs and reduce oil imports and pollution.
Syed Asif Ahmed, general manager of marketing at MG Motors, said the “industry is seeking clarity on recent budget.”
He noted that while the finance bill was silent on hybrid electric vehicles (HEVs), social media was abuzz with reports that the government may raise the sales tax from eight % to 18 % next year.
“If true, this will jeopardize the huge investment done by almost all automakers on HEV,” Ahmed said.
The MG Motors executive also warned against reduced regulatory duties on used cars and commercial imports under schemes meant for returning expatriates.
“[The] used cars importers are abusing the gift, baggage and transfer of residence scheme for commercial trading,” Ahmed said.
CAR SALES
While stakeholders have voiced concerns over policy shifts, vehicle sales continue to show signs of recovery.
Passenger car sales rose 31% in May to 11,119 units, while cumulative sales from July to May in the outgoing fiscal year increased 32% year-on-year to 94,388 units, according to PAMA data.
“[The] growth is supported by a more stable macroeconomic environment, lower interest rates, easing inflation and improving consumer sentiment,” said Myesha Sohail, an analyst at Topline Securities Ltd., in a recent research note.
Sohail expects this momentum to continue into the next fiscal year, driven by lower interest rates and a pipeline of new models across combustion, hybrid and plug-in hybrid categories.
