Fitch revises Oman’s outlook to positive, downgrades Egypt’s economic outlook

Oman’s positive outlook reflects greater confidence in the resilience of public finances, says Fitch. Shutterstock
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Updated 19 December 2024
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Fitch revises Oman’s outlook to positive, downgrades Egypt’s economic outlook

RIYADH: Fitch Ratings has revised Oman’s long-term foreign currency issuer default ratings to positive from stable and affirmed the IDR at BB+, driven by the availability of fiscal tools to combat future shocks. 

According to its latest report, the US-based credit rating agency said that the Gulf country’s ratings were supported by higher gross domestic product per capita, the positive impact of recent budget reforms and decreasing government debt per GDP. 

While Fitch maintains a positive outlook on Oman, its IDR remains lower than that of its regional neighbors, including Saudi Arabia and the UAE. In February, Fitch affirmed the Kingdom’s IDR at A+ with a stable outlook, while the UAE received an AA- rating.

According to the rating agency, a BB rating indicates an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time. However, it also suggests that the company or entity has some financial flexibility to meet its obligations despite the increased risk.

“High dependence on oil revenue, modest financial buffers given high exposure to volatile hydrocarbon prices, and Oman’s net external debtor position weigh on the ratings,” said Fitch. 

Saudi Arabia’s A+ rating indicates the Kingdom’s strong capacity to pay financial commitments and signifies low default risk. 

The analysis added that Oman’s positive outlook also reflects greater confidence in the resilience of public finances and the availability of more fiscal tools to respond to shocks than in the past.

The US-based agency said the Gulf country’s overall GDP is expected to expand by 1.8 percent in 2024, driven by the growth of the non-oil economy. 

“We project overall GDP growth of 1.8 percent in 2024, after 1.2 percent in 2023, supported by non-oil growth of 3.7 percent, while hydrocarbon GDP was hindered by OPEC+ quotas. Domestic consumption, robust foreign investment and tourism will maintain non-oil growth above 3 percent in 2025 and 2026,” added Fitch. 

The analysis added that Oman’s budget surplus is expected to narrow to 0.7 percent of GDP in 2025 and to turn into a minor deficit of 0.2 percent in 2026, assuming that the average price of Brent oil will reach $70 per barrel next year, and $65 per barrel in 2026. 

In November, Moody’s also upgraded Saudi Arabia’s long-term local and foreign currency issuer and senior unsecured ratings to Aa3 from A1. 

Moody’s gives Aa3 ratings to countries with very low credit risk and the best ability to repay short-term debt. 

Fitch downgrades Egypt’s economic growth prospects

In a separate report, Fitch Ratings downgraded Egypt’s economic growth outlook to 3.7 percent for the fiscal year 2024/2025, down from a previous projection of 4.2 percent, driven by disruptions in the Suez Canal. 

The US-based agency added that Egypt’s economy is expected to accelerate to 5.1 percent in 2025/26, up from its previous forecast of 4.7 percent. 

Fitch said that this expected economic growth is driven by the possible normalization of Red Sea navigation and a stronger performance of the services sector due to easing geopolitical risks.

In November, speaking at the Rome MED-Mediterranean Dialogues conference, Egypt’s Minister of Foreign Affairs Badr Abdelatty said that the country had incurred losses amounting to $8 billion due to a significant drop in the Suez Canal revenues. 

The analysis added that the country’s economy is recovering; however, the pace is slower than previously projected. 

In October, the International Monetary Fund said that Egypt’s economy is set to expand by 2.7 percent in the current fiscal year before accelerating to 4.1 percent next year. 

Earlier this month, another report by Fitch Ratings said that general business and operating conditions for financial institutions in Egypt are expected to improve next year. 

In that report, Fitch said that improved investor confidence and healthy foreign currency liquidity conditions are some of the major factors that could strengthen the banking sector in Egypt in 2025. 


Oil Updates — prices inch up despite tariff concerns, slowdown fears

Updated 59 min 4 sec ago
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Oil Updates — prices inch up despite tariff concerns, slowdown fears

SINGAPORE: Oil prices pared earlier losses to inch up during trade on Tuesday, despite concerns over a potential US recession, the impact of tariffs on global growth and as OPEC+ sets its sight on ramping up supply.

Brent futures edged up 18 cents, or 0.3 percent, to $69.46 a barrel at 9:40 a.m. Saudi time after falling in early trade. US West Texas Intermediate crude futures rose 9 cents, or 0.1 percent, to $66.12 a barrel after previous declines as well.

Despite the market noise, Brent at around $70 a barrel is quite a strong support and oil prices may look to stage a technical bounce at current levels, said Suvro Sarkar, energy sector team lead at DBS Bank, adding that the OPEC+ supply response will continue to remain flexible depending on market conditions.

“If oil prices fall below the $70 per barrel mark for an extended period, output hikes may be paused in our opinion. OPEC+ will also keep a careful eye on Trump’s Iran and Venezuela policies,” he said.

“The US has already taken back Chevron’s license to operate in Venezuela and it remains to be seen whether Iran sanctions will be intensified. However, in the interim, worries about global growth amid policy uncertainties and trade wars will dominate.”

US President Donald Trump’s protectionist policies have roiled markets across the world, with Trump imposing and then delaying tariffs on his country’s biggest oil suppliers, Canada and Mexico, while also raising duties on Chinese goods. China and Canada have responded with tariffs of their own.

Over the weekend, Trump said a “period of transition” for the economy is likely but declined to predict whether the US could face a recession amid stock market concerns about his tariff actions.

“Trump’s comments triggered a wave of selling as investors started pricing in the risk of weaker growth in demand,” Daniel Hynes, senior commodity strategist at ANZ said.

Stocks, which crude prices often follow, slumped on Monday, with all three major US indexes suffering sharp declines. The S&P 500 had its biggest one-day drop since Dec. 18 and the Nasdaq slid 4 percent, its biggest single-day percentage drop since September 2022.

US Commerce Secretary Howard Lutnick said on Sunday Trump would not let up pressure on tariffs on Mexico, Canada and China.

On the supply front, Russia’s Deputy Prime Minister Alexander Novak said on Friday the OPEC+ group agreed to start increasing oil production from April, but could reverse the decision afterwards if there were market imbalances.

In the US, crude oil stockpiles were expected to have risen last week, while distillate and gasoline inventories likely fell, a preliminary Reuters poll showed on Monday.

The poll was conducted ahead of weekly reports from industry group the American Petroleum Institute, due at 11:30 p.m. Saudi time on Tuesday, and the Energy Information Administration, the statistical arm of the US Department of Energy, at 5:30 p.m. Saudi time on Wednesday. 


Pakistan oil regulator in crosshairs of refineries, marketing firms over ‘take or pay’ clause

Updated 11 March 2025
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Pakistan oil regulator in crosshairs of refineries, marketing firms over ‘take or pay’ clause

  • OMCs strongly oppose proposal due to fear of liquidity crises, supply disruptions and potential market exits
  • Refineries say oil marketing firms failing to lift product disrupts operations, threatens supply chain stability

ISLAMABAD: The Oil and Gas Regulatory Authority (OGRA) said this week it would mediate between refineries and Oil Marketing Companies (OMCs) to reach a “mutually agreeable” resolution on differences over the authority’s proposal to impose a “take or pay” clause in purchase agreements with refineries, which OMCs argue would unfairly burden them.

Pakistan has five oil refineries that process crude oil to produce refined petroleum products. Around 30 OMCs are licensed by the Oil and Gas Regulatory Authority (OGRA) to ensure the availability of petroleum products in the country.

A conflict emerged between local oil refineries and OMCs over OGRA’s proposal to include a take or pay clause in Sales Purchase Agreements (SPAs), with OMCs strongly opposing the move fearing liquidity crises, supply disruptions and potential market exits. Under the new contracts, oil marketing companies would have to pay at least cost to refineries if they are unable to pick up their allocated quantities of product.

The chairman of the Oil Marketing Association of Pakistan (OMAP), a body representing two dozen small and medium-sized Oil Marketing Companies (OMCs), wrote a letter to OGRA Chairman Masroor Khan this week to formally oppose the proposed clause, saying it would serve the interests of refineries and large OMCs at the expense of smaller players, further consolidating the monopolistic control of big fish in the oil sector. 

OGRA spokesperson Imran Ghaznavi told Arab News refineries and OMCs had been asked to enter into written sale and purchase contracts. 

“The take or pay clause means if an OMC does not buy the contracted quantity, it will still have to pay the purchase price or a penalty and vice versa,” he said. 

OMAP chairman Tariq Wazir Ali told Arab News on Monday the body had “expressed our grave concerns regarding the proposed imposition of the take or pay clause in the SPAs between refineries and OMCs as it poses significant risks to the financial sustainability of OMCs.” 

He said imposing a take or pay clause would hamper competition, discourage new entrants, and ultimately harm the overall efficiency of the petroleum supply chain. He also said the proposed clause overlooked refineries’ opportunistic behavior as they often withheld supply when prices were expected to rise, forcing OMCs into costly imports, and offloaded maximum stock when prices fell, causing financial losses to OMCs.

Given these circumstances, it was unreasonable to expect OMCs to bear inventory losses while refineries remained insulated from the market’s volatility, Ali said. 

“The proposed mechanism must be accompanied by a robust enforcement framework ensuring that refineries adhere to the same rules of fair play and supply commitments, regardless of market price trends,” he added, urging OGRA to convene an inclusive consultative meeting with equal representation of all stakeholders, including small and medium OMCs, before finalizing a decision. 

“MUTUALLY AGREEABLE CONTRACTS“

The conflict has emerged after five leading oil refineries wrote a letter to the OGRA chairman, arguing that OMCs had frequently failed to pick up agreed quantities of High-Speed Diesel (HSD) and Motor Gasoline (MOGAS), which had disrupted refinery operations and threatened supply chain stability. The refineries said while they maintained commercial agreements with OMCs, it was OGRA’s responsibility to enforce compliance with these contracts.

The refineries pointed to Rule 35(g) of the Pakistan Oil (Refining, Blending, Transportation, Storage, and Marketing) Rules 2016, which mandates that local production must be prioritized before allowing imports. Keeping this in mind, they have supported OGRA’s suggestion of introducing a take or pay clause to ensure product uplift but say it should be implemented through mutual agreement and strict regulatory oversight. 

“The engagement sessions with the OMCs will start soon,” OGRA spokesperson Ghaznavi said, “and OGRA will, in the best national interest and for achieving efficiency in the oil supply chain, mediate between refineries and OMCs for a mutually agreeable sale and purchase contracts.”


Aramco’s CEO calls for new global energy model during CERAWeek address

Updated 11 March 2025
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Aramco’s CEO calls for new global energy model during CERAWeek address

  • ‘Investments in all sources is needed,’ says Amin Nasser 

DHAHRAN: Aramco’s president and CEO has called for a fundamental shift in global energy transition planning, warning that the current approach risks severe economic and energy security consequences.

The planning of global energy transitioning needs a fundamental shift as the current approach is a severe economic risk, said Amin Nasser.

Delivering a keynote speech at CERAWeek 2025 in Houston on Monday, Nasser stressed the urgent need for a new global energy model that balanced sustainability, security, and affordability.

He pointed to annual funding needs of up to $8 trillion that would be required for global climate action and cautioned that neglecting conventional energy sources in the transition process could lead to dire outcomes, describing it as a “fast track to dystopia.”

Criticizing the belief that traditional energy sources could be rapidly phased out, Nasser said: “The greatest transition fiction was that conventional energy could be almost entirely replaced, virtually overnight. Hydrocarbons still provide over 80 percent of primary energy in the US, almost 90 percent in China, and even in the EU it is more than 70 percent.”

He added: “New sources add to the energy mix and complement existing sources; they do not replace them. New sources cannot even meet the growth in demand, while the proven sources needed to fill the gap are demonized and discarded. It is a fast track to dystopia, not utopia.”

Nasser also stressed that a new global energy model was essential to meet rising energy demand.

He said: “First, all sources must play a growing role in meeting rising energy demand in a balanced, integrated manner. Certainly, that includes new and alternative energy sources but they will complement conventional energy, not replace it in any meaningful way.

“So, we need investments in all sources. And to further free up such investments globally, we need extensive deregulation and greater incentives for financial institutions to provide unbiased financing. Second, the model must genuinely serve the needs of developed and developing nations alike, as originally promised, especially when it comes to technology. Third, and crucially, this has to be about delivering real results.”

Addressing the importance of reducing emissions, Nasser added that environmental concerns should remain at the forefront but must be approached pragmatically.

He said: “Let me be absolutely clear: This does not mean stepping back from our global climate ambitions. Reducing greenhouse gas emissions must still get the highest possible priority.

“That means prioritizing technologies that drive efficiency, lower energy use, and further reduce greenhouse gas emissions from conventional energy — and AI (artificial intelligence) will clearly be a game-changing enabler. But the future of energy is not only about sustainability; security and affordability must share the stage, with all energy sources working in harmony as one team, delivering real results.”

CERAWeek is one of the world’s most influential energy conferences, bringing together industry leaders, government officials, policymakers, and CEOs to discuss critical issues such as energy security, supply, climate, technology, and sustainability.

More than 10,000 participants from over 2,000 companies and 80 countries are attending this year’s event, which features over 1,400 expert speakers.


Mideast set for private equity boom amid global market revival: report

Updated 10 March 2025
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Mideast set for private equity boom amid global market revival: report

RIYADH: The Middle East is rapidly emerging as a prime destination for private equity investment, spurred by a global resurgence in dealmaking, according to Bain & Co.’s latest Global Private Equity report.

The report highlights a 37 percent rise in global buyout investment value, reaching $602 billion in 2024, fueled by declining interest rates, renewed investor confidence, and the growing need to deploy idle capital.

As economic diversification accelerates across the Gulf, government-backed initiatives are driving investments in technology, renewable energy, and infrastructure, positioning private equity firms to capitalize on these shifting dynamics.

“The Middle East is entering a dynamic period of growth and transformation, creating unprecedented opportunities for investors,” said Gregory Garnier, head of Bain & Co.’s private equity practice in the region.

He emphasized that success in this market will depend on leveraging local expertise, forming strategic partnerships, and adopting innovative value-creation models.  

This rise in Middle Eastern activity mirrors broader global trends. Public-to-private transactions, for example, are leading the private equity market, accounting for $250 billion in 2024—representing nearly half of transactions over $5 billion in North America.

Global challenges persist

Despite a strong recovery in dealmaking, fundraising remains difficult, with investor caution driven by ongoing economic and geopolitical uncertainties.

While exit activity rebounded by 34 percent to $468 billion, private equity firms still face a backlog of 29,000 unsold companies, limiting distributions to limited partners.

Rising competition for high-quality deals has kept valuation multiples elevated, and increasing debt costs are complicating traditional leveraged buyouts. However, the Middle East stands out as a key market, with governments actively supporting private equity investments through initiatives like Saudi Vision 2030, the UAE’s economic diversification strategy, and Qatar’s long-term plans.

Sovereign wealth funds in the region have also become major players, acting as key limited partners and co-investors in both local and global deals.

Rising sectors and investment focus

Technology continues to dominate private equity globally, accounting for 33 percent of all buyout deals by value. In the Middle East, key areas of focus for investors include fintech, artificial intelligence, digital healthcare, and sustainable infrastructure projects. These sectors align with a growing trend toward impact investing and sustainability, driven by government efforts to foster long-term, eco-friendly economic growth in the Gulf.

Looking ahead, Bain & Co. forecasts that private equity will continue its recovery through 2025, assuming stable economic policies and trade conditions.

Hugh MacArthur, chairman of Bain’s Global Private Equity practice, noted that despite ongoing challenges such as inflation, interest rates, and geopolitical risks, the overall sentiment in the industry remains one of cautious optimism.


Closing Bell: Saudi stock market sees losses as TASI edges down 0.77%

Updated 10 March 2025
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Closing Bell: Saudi stock market sees losses as TASI edges down 0.77%

RIYADH: The Saudi stock market closed lower on Monday, with the Tadawul All Share Index falling by 90.89 points, or 0.77 percent, to finish at 11,745.63.

The total trading volume on the benchmark index amounted to SR5.3 billion ($1.4 billion), with 52 stocks advancing and 192 declining.

The parallel market, Nomu, also saw a decline, dropping 300.45 points, or 0.96 percent, to close at 31,031.37. Out of the 80 listed stocks, 32 gained while 48 declined.

The MSCI Tadawul Index mirrored the trend, falling by 7.38 points, or 0.49 percent, to close at 1,487.1.

Derayah Financial Co. saw the highest gains on the main index, with its share price surging 30 percent to SR39. Riyad Bank also performed well, rising 4.47 percent to SR30.40, while Alujain Corp. gained 3.59 percent, closing at SR33.20. Saudi Industrial Development Co. also saw an increase, rising 2.66 percent to SR27.

Al-Baha Investment and Development Co. suffered the largest loss, with its stock price falling 8.11 percent to SR0.34. Rasan Information Technology Co. dropped 7.76 percent, closing at SR72.50, while Riyadh Cables Group Co. fell 7.67 percent to SR118.

Molan Steel Co. revealed plans to issue riyal-denominated sukuk, appointing Afaq Financial as the sole arranger for the offering. The sukuk, valued at SR20 million, aims to finance the company’s investment and operational needs. The issuance has already received the necessary approvals from the Finance Authority. Despite this news, Molan Steel’s stock dropped 1.59 percent to SR3.10.

Derayah Financial, a leading digital investment platform, successfully listed its shares on the Saudi Exchange. The SR1.5 billion IPO was priced at SR30 per share, valuing the company at SR7.5 billion. The offering was oversubscribed, with institutional investors subscribing 162 times over, generating SR243 billion in orders. The retail tranche was 15 times oversubscribed, attracting 586,422 investors.

Arabia Insurance Cooperative Co. reported a 17.19 percent decline in insurance revenues for the year ending December 31, 2024, dropping to SR694.7 million from SR838.9 million in 2023.

The decline was primarily due to lower motor and medical insurance revenues, although the Engineering insurance segment showed growth.

The company’s net profit fell 0.14 percent, reaching SR30.1 million compared to SR60.5 million last year. This decrease was mainly due to a drop in net insurance results and lower other income, although investment income rose by SR7.2 million. Arabia Insurance’s share price fell 3.35 percent to SR12.10.

Nahdi Medical Co. reported an 8.4 percent increase in revenue for the full year 2024, rising to SR9.45 billion from SR8.71 billion in 2023. The growth was driven by strong retail performance and significant expansion in both the healthcare and UAE markets.

However, the company’s net profit declined by 8.1 percent, reaching SR820.7 million, down from SR892.6 million last year, due to increased operating expenses. Despite the strong revenue growth, Nahdi’s share price decreased by 1.86 percent to SR115.80.