By Rushdi Siddiqui, Global Head of Islamic Finance, Thomson Reuters

Dear Dr. Ahmad Mohamed Ali, President, Islamic Development Bank (IDB) Group:

Asalaam Alaikum:

The Islamic finance world welcomes your comments on the ‘Mega’ Islamic Bank to effectively compete against well capitalized conventional financial institutions.

“…The ‘Mega Islamic Bank’ comes as an initiative of the Islamic Development Bank in its efforts to address the dearth of senior financiers, the absence of the Islamic tools of stock exchange and the absence of market liquidity between Islamic banks.”

However, $1 billion, with $500 million in paid capital by the three founders (IDB, Dallah Albaraka and Qatar Government), is smaller than three existing Islamic banks, which have never addressed themselves as ‘mega.’ The three include Saudi Arabia’s Al Rajhi, Qatar’s Mashraf Al Rayan and Kuwait’s Kuwait Finance House (KFH). Furthermore, it seems the ‘mega’ story may be incomplete without Malaysia’s participation.

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The United States’ hydrocarbon’s production will eclipse Saudi Arabia and Russia as early as 2017, says Citibank. In fact the energy surplus points to North America effectively becoming the new Middle East by the next decade. READ MORE HERE

Saudi Arabia is exploring for 100 billions of new barrels to retain its influence in world oil markets.

Saudi Arabia is exploring for nearly 100 billion barrels of new oil in existing fields and offshore in the Red Sea, according to an Associated Press report. READ MORE HERE

Libya’s oil sector has returned quickly to full speed, but the rest of the country remains in a state of disrepair. Maplecroft identifies at least nine key challenges facing the country.

While Libya has done well in ramping up oil production to near pre-civil war levels, much remains to be done. READ MORE HERE

Why did Exxon strike a deal with Kurdistan at the cost of upsetting Baghdad? Because Kurdistan offered up one of the greatest oil basins in the world, roughly half the size of Abu Dhabi. READ MORE HERE

A spate of new announcements from international oil companies suggests Egypt’s mature oil and gas sector remains formidable.

Despite significant political and economic problems in Egypt and falling crude production levels, the country’s oil and gas sector remains attractive to international companies. READ MORE HERE

January 17, 2012

By Rushdi Siddiqui, Global Head of Islamic Finance, Thomson Reuters

“The proper man understands equity, the small man profits.” Confucius.

The year 2011 was the year for [Malaysia] Shariah compliant index out-performance against all conventional developed and emerging market country indicies and almost all frontier countries.

The Islamic finance industry has not talked up the Islamic equity capital market story, as the Islamic debt capital market poster child, ‘Sukuk,’ has become the alter-ego of Islamic finance. But, does that amount to concentration brand and business risk for a $1 trillion, where Sukuk are, at best, 20% of Islamic finance?
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Iraq has disclosed detailed information about the US$ 41 billion in revenue it received from oil and gas exports in 2009. Iraq’s disclosure of the figures follows the country’s commitment to the EITI standard, the global standard for transparency of resource revenues. The revenues are published in Iraq’s first EITI Report, which detailed production figures and revenues from the sales of oil abroad in 2009.

Clare Short, Chair of the international EITI Board welcomed the report saying, “Through the launch of its first EITI report, Iraq has taken a significant step towards transparency in its all-important oil sector. With transparency of the payments for its oil and gas, Iraq’s citizens can see how much the government receives from the country’s vast natural resources and start to ensure that Iraq’s resource wealth is properly managed. Greater transparency will help Iraq overcome some of the many challenges it is facing”.
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It’s only the second week of the year and oil analysts are already in a frenzy, making bold predictions for crude prices - from alpha bearish to mega bullish.

The latest bold prediction came from Capital Economics who have thrown a challenge to other analysts by predicting that Brent crude will average around USD85 this year. READ MORE HERE

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Mideast oil and gas developers can rest easy. ExxonMobil’s energy outlook through to 2040, predicts there is a huge role for oil and gas energy sources in the future, with alternative energies remaining on sidelines. READ MORE HERE

Oil prices will rise higher as global economy prospects improve over time. However, dramatic shifts and spikes could upset the fragile recovery and have unintended consequences which could lead to greater demand destruction for fossil fuels altogether, much to the dismay of oil exporters who are investing heavily in fossil fuels.
The world could experience a period of significant volatility, with oil prices leaping upward and oscillating between $125 and $175 a barrel for some time.

But don’t get the Saudi champagne out just yet as it may not translate into petrodollars flowing into the Gulf coffers. READ MORE HERE

rickz /Foter

Read the ten major forecasts from Opec’s latest World Oil Outlook, ranging from the challenges and prospects for oil developers to the intense competition they will face over the next 25 years. READ MORE HERE

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Oil services and drilling in Iraq may only be currently a $600 million to $800 million market but there is a good likelihood that it could develop into a $6 to $8 billion market, according to Barclays Capital.

“We believe the run rate by year-end will be close to $1.5 billion. There are about 30 rigs drilling currently and NGP believes the rig count could ultimately surpass 300 rigs,” noted BarCap. “The scope of work being performed today is largely limited to workovers, with most drilling campaigns yet to commence. The future of the market lies in the integrated services model, in NGP’s opinion and ours. Service companies are not looked at with the same disdain as oil companies; however, there is an intense focus on cost controls due to cultural mindset.”

BarCap believes Iraq represents one of the largest multi-year growth stories for the oil services industry this decade. Companies that are able to execute and mitigate the political and security pitfalls in Iraq will be rewarded in our opinion.

(c) alifarabia.com

Oil and gold are poised to benefit from the dithering policies of Western leaders and the possible launch of the Fed’s Operation Twist. Other commodities are set see a run-up thanks to tight supplies.

The world’s major commodities had a phenomenal run in the past two years, but cooled down in the first six months of 2011.

Within the first six months of the year, only two commodities - silver and coal - saw a double-digit rise and only six of the 14 main commodities were in positive territory. READ MORE HERE

While the U.S. oil sanctions on Syria are welcome, the world can inflict a much bigger blow to Bashar Al-Assad’s regime if its biggest customer — the European Union — shunned its crude exports too.

It has become a grim but almost familiar sight on TV: unarmed Syrian protesting against the government on the streets, only to flee at the sound of gunfire from Syrian forces - a few minutes later lay bodies on the streets. READ MORE HERE

What’s in store for oil and gold — the ying and yang of the global economy? At least one analyst thinks gold is a bubble poised to burst.

In the space of a short few weeks, the world looks less sure of its self. Aggressive forecasts are being toned down, massive plans are being scaled back, growth figures are being revised downwards, and bulls have turned slightly bearish. READ MORE HERE

With a string of impressive economic policies, Iran has ensured that it remains a major energy supplier, despite various restrictions imposed by the western international community.

But while Iran has benefited from high oil prices, lack of major investments in the country’s energy sector could hamper growth and continue to handicap the country’s economic prosperity. Add to this dynamic, is Tehran’s controversial nuclear programme and its divisive role in regional politics, which makes it a target for many countries around the region that are eager to hurt Iran’s economy. READ MORE HERE
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As the global economy lurches from one crisis to the next, we look at the prospects for the regional economies in troubling global conditions which could slash domestic growth.

Another quarter, another headache. Gulf governments have suffered a tumultuous first two quarters of the year and were hoping for some semblance of sanity in the third quarter. At the very least, regional governments were hoping that tragic developments within the Middle East had remained isolated - Syria, Yemen and Libya - leaving other countries in relative safety and peace.
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Opec’s annual bulletin reveals the changing dynamics of the energy industry and the key challenges facing both the producers and the consumers.

Click through the charts to find out more:

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Forget Arab Spring. If Saudi Arabia’s spending patterns and economic policies don’t change, it could be staring at a breakeven oil price of an astonishing $320 a barrel by 2030, says Jadwa.

With $562-billion in net foreign asset, the second largest oil reserves in the world after Venezuela (according to the latest Opec bulletin), and the second largest oil output in the world after Russia - Saudi Arabia’s future looks rosy and solid. READ MORE HERE

With Opec seemingly irrelevant, the GCC is trying to find a balance between responsible crude suppliers and their own domestic needs. But, as Deutsche Bank warns, their own high breakeven prices are making them even more vulnerable to oil price shocks than before. READ MORE HERE

Donald Trump’s recent hysterical comments on the Organization of the Petroleum Exporting Countries (OPEC), Saudi Arabia and Kuwait are set to put more pressure on President Obama. Expect more pressures on Mideast states as the race for the White House heats up. Read More Here

Worried about ‘peak oil’? How about ‘peak everything’? A GMO analyst crunches the numbers to show why the structural shifts in the world’s consumption patterns will alter the way we view and invest in commodities.

The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value and we all need to adjust our behaviour to this new environment. It would help if we did it quickly, says Jeremy Grantham, co-founder of GMO, a global investment firm managing $107-billion in client assets.
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HSBC’s energy outlook for 2050 forecasts that we may have as little as 49 years of oil left and we will have to radically alter our energy consuming ways to avoid a massive energy crunch. Read More

Here is the leaked Wikileak cable that shows a former Aramco executive saying Saudi Arabia has over-estimated its oil reserves.

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Qatar’s investment over the next five years will be a staggering $225 billion, but the country is still worried about low energy prices during the period.

As a roadmap for its social and economic aspirations, you can’t really fault Qatar’s National Development Strategy 2011-2016 report. It is inspirational, comprehensive and packed with good intentions, as all such reports should.

For an economy that is growing at a rate that would put China to shame, it’s national development strategy (NDS) is also lacking in a fair bit of pride and glory - if anything, there are parts of the report that are a bit hesitant and self-doubting. The missing vainglory is a contrast from some of the other national development strategies that one has seen over the years - and that is not a bad thing. It’s almost endearing. Read More

While oil inflation fears in emerging markets are warranted, these risks are being mitigated as Gulf oil-exporting states buy emerging market products and services as part of their fiscal spending spree.

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David Rosenberg is an outstanding economist and strategist at Glushin & Sheff in Toronto. He notes that while there are many known unknowns, there are a few things worth pondering about strategists and risk managers like him
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The Japan earthquake, Middle East unrest and the euro crisis: You ain’t seen nothing yet. Here are eight more global shocks already under way or on the horizon. And 10 questions risk managers should ponder. Read More

Also Read:
Black Swan Fatigue

Eight Points Risk Managers Must Ponder

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Here are the 21 orders announced by the Saudi authorities on March 18, 2011: Read More

The Saudi King’s speech had 21 royal orders but very little to comfort reformists. It appears that the authorities have used its biggest political crisis to launch an economic bailout. Read More

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As Japan’s nuclear meltdown puts the brakes on yet another power source, the world is looking at ME energy to fill the gap. Luckily, there is plenty coming on line, despite the region’s shot-term problems. Read More

Read why EFG-Hermes is worried about Omani and Bahraini growth. And the bank’s insightful regional heat map that neatly highlights problem areas. Read the full story here

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Erste Research Group’s excellent report on oil crunches some fascinating data on oil and its current short-term and long-term influence on the global economy. We picked ten charts to highlights some key findings from the report.
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The only Middle East country in the Ciitbank list (Also read full report Regional Dynamos) is Saudi Arabia which is expected to emerge as the sixth largest economy in the world, rising above Canada, United Kingdom and Switzerland. Read More

Citibank believes Iraq can shrug off its current turmoil to emerge as one of the world’s fastest growing economies in the world over the next 40 years. Read More

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Find out which Middle East countries make it to Citibank’s list of the fastest growing economies in the world. Hint: it’s not Qatar. Read More

Recent economic data shows that the Saudi economy is on song and on the way up. But that tells us only half the story. Read More

Oil prices are poised to hit the magical $100 per barrel once again and economists, analysts have taken out the proverbial calculators to see what it means for oil-based economies of the Middle East. Read More