SEOUL: South Korea’s purchases of US oil and gas this year will hold to the rapid pace set in 2018, narrowing its trade surplus with the world’s top economy further and bolstering its ties to Washington.
South Korea is expected in January and February to import at least 18 million barrels of crude oil and 900,000 tons of liquefied natural gas (LNG) from the US, according to Refinitiv Eikon.
That is a four-fold increase on oil from a year earlier and a slight drop on LNG, indicating the record US crude and LNG volumes heading into South Korea in 2018 are set to continue, supported by favorable market conditions brought about by rising US oil and gas output.
The jump in South Korea’s US oil and gas imports comes as US President Donald Trump continues to push to reduce trade deficits with major US trading partners. US oil and LNG exports are a key part of this strategy.
“At the moment, the trend (of importing US crude) will stay. The economics for US crude is a little bit better than Middle East and North Sea oil,” said a South Korean refining source who declined to be named due to company policy.
Record US crude oil and LNG volumes flowed into South Korea in 2018, while supplies from the Middle East were tightened amid OPEC-led output cuts and a reimposition of US sanctions on Iran.
The US was South Korea’s sixth-biggest crude supplier last year, its highest ranking ever as it overtook Iran and Russia. It also became South Korea’s third-largest LNG supplier, while South Korea was the top importer of US LNG.
South Korea’s US oil and gas imports more than quadrupled in value to $6.75 billion in 2018 from $1.5 billion in 2017, according to the country’s customs data.
The US oil import value of $4.5 billion alone was more than six times the $725 million taken in US oil in 2017.
“Buying more US oil and gas was part of (Seoul’s) strategy as our wide trade surplus against the US was grounds for revising the Korea-US free trade deal,” said Je Hyun-jung, director at the Korea International Trade Association.
South Korea’s 2018 trade surplus with the US at $13.86 billion was the lowest since 2011, down 22.4 percent from $17.86 billion a year earlier, the customs data showed.
In 2017, Trump threatened to renegotiate or scrap what he called a “horrible” bilateral trade deal that had doubled the US trade deficit with South Korea since 2012.
The two countries agreed to revise the deal last year, with Seoul capping its steel exports to the US to avoid hefty tariffs and giving greater market access to US carmakers. The revision took effect on Jan. 1.
Tilak Doshi, a Singapore-based analyst at consultancy Muse, Stancil & Co, said that improving trade ties between South Korea and the US will also support their shared goal of North Korea’s denuclearization.
South Korea imports almost all of its energy. It is the world’s fifth-largest crude and third-largest LNG importer, typically taking 80 percent of its oil and more than 40 percent of its LNG from the Middle East.
However, in 2018, as US oil flows grew, the Middle East’s share of South Korean crude imports dropped to 73.5 percent, the lowest since 2002.
While it is not certain freight rebates for non-Middle East crude imports — part of South Korea’s diversification push — will continue, higher US crude output and wider discounts for West Texas Intermediate (WTI) will make US oil attractive to South Korean buyers looking for cheaper sources outside their traditional suppliers.
GS Caltex, South Korea’s No. 2 refiner, bought 10 million barrels of US crude, mainly WTI Midland and Mars, for arrival over January-February, said a company spokesman, as US oil has became more price competitive.
South Korea’s hunt for condensate to replace Iranian supplies is also expected to intensify later this year as waivers from US sanctions start to expire in May.
South Korea steps up US oil, gas buys as Mideast supplies tighten
South Korea steps up US oil, gas buys as Mideast supplies tighten
- South Korea is expected in January and February to import at least 18 million barrels of crude oil and 900,000 tons of liquefied natural gas (LNG) from the US
- The jump in South Korea’s US oil and gas imports comes as US President Donald Trump continues to push to reduce trade deficits with major US trading partners
Abu Dhabi wealth fund seeks full ownership of Aramex
- ADQ, through its subsidiary Q Logistics, makes a conditional cash offer
JEDDAH: Abu Dhabi’s sovereign wealth fund has submitted a cash offer that will see it acquire 100 percent of Aramex’s shares, according to an announcement made by the logistics company on Monday.
The offer, which is conditional, comes from Q Logistics Holding LLC, a fully owned subsidiary of ADQ. It targets the portion of Aramex’s issued and paid-up share capital that is not already owned by Abu Dhabi Ports Co.
ADQ was established in 2018 and has a broad portfolio of domestic assets, including Abu Dhabi state carrier Etihad Airways and Abu Dhabi Ports Co., through which it holds a 22.69 percent stake in Aramex.
Aramex confirmed that the proposal will be presented to its board of directors. The company also stated that it will adhere to the required procedures in accordance with the decision of the chairman of the Securities and Commodities Authority regarding the Rules of Acquisition and Merger of Public Joint Stock Companies.
Following the acquisition offer, Aramex’s shares opened at 2.65 dirhams ($0.72), up from the previous close of 2.31 dirhams.
In its statement, Aramex noted that shareholders, excluding Abu Dhabi Ports Co., would receive 3 dirhams per share in cash. This offer represents a 33 percent premium over the closing share price of 2.25 dirhams as of Jan. 9. Furthermore, the offer price is a 35 percent premium over the one-month volume-weighted average price of 2.23 dirhams per share.
The company also stated that it would provide further updates on any material developments related to the offer.
In a separate announcement on Jan. 8, Aramex revealed a major step in its efforts to decarbonize logistics in the oil and gas sector.
The company launched its first commercial deployment of electric trucks and charging solutions in the UAE, in partnership with Admiral Mobility, a local electric vehicle solutions provider. The new fleet includes eight-tonne Farizon electric trucks, each equipped with a 162 kWh battery, certified for use in both the UAE and Saudi Arabia.
This initiative aligns with Aramex’s broader strategy to offer sustainable logistics solutions to its clients while reducing the environmental impact of industrial supply chains.
The company emphasized that the electric trucks will specifically benefit its oil and gas sector clients by offering efficient and eco-friendly transportation options. Aramex remains committed to achieving carbon neutrality by 2030 and net-zero emissions by 2050.
Saudi banking sector boosted by flurry of debt, sukuk issuances
- Al Rajhi Bank, Banque Saudi Fransi, and Arab National Bank are among the key players
- CMA’s strategy seeks to expand the debt instruments market to 24.1% of GDP by 2025
RIYADH: Saudi Arabia’s banking sector is experiencing a surge in activity in debt and sukuk markets as leading financial institutions move to strengthen their capital bases and fund strategic growth initiatives.
Al Rajhi Bank, Banque Saudi Fransi, and Arab National Bank are among the key players announcing substantial issuances to tap local and international investors.
This wave in activity supports the Capital Market Authority’s objective of transforming the Kingdom’s investment market into a key pillar of the its economy, as outlined in Vision 2030. The plan emphasizes expanding financing options, promoting funding opportunities, and attracting international investors.
Al Rajhi Bank unveiled plans to issue US dollar-denominated additional Tier 1 capital sustainable sukuk under its international sukuk program established in April.
The issuance, approved by the bank’s board in March, will be executed through a special purpose vehicle and offered to eligible investors both within Saudi Arabia and abroad, according to a statement on the Saudi stock exchange.
The bank has enlisted a consortium of leading financial institutions, including Citigroup, HSBC, and Goldman Sachs, as joint lead managers and bookrunners for the proposed issuance.
Banque Saudi Fransi similarly announced its intention to issue US dollar-denominated certificates under its Trust Certificate Issuance Program. The initiative follows a board resolution granting executive management the authority to oversee the program and carry out issuances as needed.
“The issuance is expected to be through a special purpose vehicle and by way of an offer to eligible investors in the Kingdom of Saudi Arabia and internationally,” a statement said.
HSBC will serve as global coordinator, and several prominent institutions, including Japanese-based bank holding company Mizuho and Saudi Fransi Capital, acting as joint lead managers.
Meanwhile, Arab National Bank has opted for a Saudi Riyal-denominated additional Tier 1 capital sukuk.
The private placement, valued at SR11.25 billion ($2.9 billion), aims to bolster the bank’s capital base while supporting general corporate purposes. HSBC Saudi Arabia and ANB Capital Co. have been appointed as joint lead managers for the issuance.
The developments highlight the growing momentum in the Kingdom’s financial markets as banks look to diversify funding sources and enhance their capital adequacy.
By prioritizing sustainable finance and investor protection, Saudi Arabia is aligning with international standards and leveraging its leadership in Islamic finance to attract a broader range of investors.
The CMA’s strategy seeks to expand the debt instruments market to 24.1 percent of gross domestic product by 2025 by implementing regulatory reforms, improving market accessibility, and streamlining issuance processes.
Annual trade between Qatar and Jordan hits $248m
RIYADH: The trade exchange between Qatar and Jordan rose to 910 million Qatari riyals ($248.16 million) in 2024, a 5.81 percent increase from the previous year, driven by higher imports of Jordanian food and consumer goods.
Both countries saw their trade balance grow 5.6 percent year on year over the 12-month period, with total commerce rising from 800 million riyals in 2022 to 860 million riyals in 2023, according to data from Qatar’s Planning and Statistics Authority, as reported by Jordan News Agency.
This comes as the trade and economic relationship between Jordan and Qatar has been on an upward trajectory since the establishment of the Joint Business Council in 2015.
In November, Jordanian Prime Minister Jafar Hassan and Qatari Prime Minister and Foreign Minister Sheikh Mohammed bin Abdulrahman Al-Thani met to discuss ways to further enhance cooperation in various fields including economic development, trade, investment, and infrastructure.
Last year, Jordan’s major exports to Qatar included food and consumer products such as fresh and processed foods, vegetables, and fruits, as well as meats, dairy products, and grains.
Other significant food exports included fresh cheeses, poultry, sweets, and rice. Additionally, Jordan shipped juices, nuts, and oils, as well as pickles, herbs and honey.
Eggs and Jordanian coffee were also traded.
Conversely, Qatar’s exports to Jordan were largely comprised of chemicals and industrial products, including motor oils, sulfuric acid, aluminum molds, and paraffin.
Other key Qatari exports to Jordan were polyethylene, iron rods, and chemical fertilizers, as well as plastic bags, organic fertilizers, and medical solutions.
The growing trade ties between Qatar and Jordan are part of a broader trend of increasing regional trade.
Saudi Arabia also saw significant growth in its trade relationship with Jordan. In the third quarter of 2024, Saudi exports to Jordan reached SR3.78 billion ($1.01 billion), marking a 15.95 percent year-on-year increase.
Non-oil exports from the Kingdom to Jordan totaled SR2.26 billion, with rubber and plastic products accounting for SR766.7 million and chemicals contributing SR320.2 million. Jordan’s exports to Saudi Arabia during the same period were valued at SR1.49 billion.
With ongoing efforts to bolster economic ties, the trade relationship between Qatar and Jordan is expected to continue its positive trajectory.
Saudi Arabia, Japan strengthen investment ties with strategic MoU
DUBAI: The Saudi Investment Promotion Authority on Monday signed a memorandum of understanding with Japan’s Mizuho Bank Ltd. in an effort to enhance investment opportunities between the two countries.
The MoU was signed by Assistant Minister of Investment Ibrahim bin Yousef Al-Mubarak and bank CEO Masahiko Kato.
The agreement means the Saudi Investment Promotion Authority will provide its expertise and information to help integrate support services to Japanese companies interested in investing in the Kingdom, according to the Saudi Press Agency.
The memorandum comes within the Vision 2030 framework, which aims to diversify the national economy by attracting foreign investments, supporting economic partnerships with international companies, strengthening bilateral investment relations and long-term partnerships, and opening new qualitative areas for cooperation in the investment and economic fields.
On Sunday, the Saudi Japanese Joint Business Council Meeting convened in Riyadh with Minister of Investment Khalid Al-Falih and Japanese Minister of Economy, Trade and Industry Muto Yoji.
Attending the meeting were more than 80 representatives of companies and entities from both nations.
The Japanese delegation included those from industrial and commercial companies, as well as financial institutions focusing on modern technologies with an interest in the Saudi market.
Oil Updates — crude jumps as new US sanctions to curb Russian supply to China, India
SINGAPORE: Oil prices extended gains for a third session on Monday, with Brent rising above $80 a barrel to its highest in more than four months, as wider US sanctions are expected to affect Russian crude exports to top buyers China and India.
Brent crude futures climbed $1.14, or 1.43 percent, to $80.90 a barrel by 10:41 a.m. Saudi time after hitting an intraday high of $81.49, the highest since Aug. 27.
US West Texas Intermediate crude rose $1.20, or 1.57 percent to $77.77 a barrel after touching a high of $78.39, the most since Oct. 8.
Brent and WTI have risen by more than 6 percent since Jan. 8, and both contracts surged after the US Treasury imposed wider sanctions on Russian oil on Friday.
The new sanctions included producers Gazprom Neft and Surgutneftegas, as well as 183 vessels that have shipped Russian oil, targeting the revenue Moscow has used to fund its war with Ukraine.
Russian oil exports will be hurt severely by the new sanctions, pushing China and India, the world’s top and third-largest oil importers respectively, to source more crude from the Middle East, Africa and the Americas, which will boost prices and shipping costs, traders and analysts said.
“Friday’s announcement strengthens our view that the risks to our $70-85 Brent range forecast are skewed to the upside in the short term,” Goldman Sachs analysts said in a note.
“We estimate that the vessels targeted by the new sanctions transported 1.7mb/d of oil in 2024 or 25 percent of Russia’s exports, with the vast majority being crude oil.”
Expectations of tighter supplies have also pushed Brent and WTI monthly spreads to their widest backwardation since the third quarter of 2024. Prompt prices are higher than those in future months in backwardation, indicating tight supply.
RBC Capital Markets analysts said the doubling of tankers sanctioned for moving Russian barrels could serve as a major logistical headwind to crude flows.
Many of the tankers named in the latest sanctions have been used to ship oil to India and China as previous Western sanctions and a price cap imposed by the Group of Seven countries in 2022 shifted trade in Russian oil from Europe to Asia. Some of the ships have also moved oil from Iran, which is also under sanctions.
“The last round of OFAC (US Office of Foreign Assets Control) sanctions targeting Russian oil companies and a very large number of tankers will be consequential in particular for India,” said Harry Tchilinguirian, head of research at Onyx Capital Group.
JPMorgan analysts said Russia had some room to maneuver despite the new sanctions, but it would ultimately need to acquire non-sanctioned tankers or offer crude at or below $60 a barrel to use Western insurance as per the West’s price cap.
