Saudi Arabia has a number of tools it can use to retaliate against any potential US sanctions related to the disappearance of Jamal Khashoggi, the Saudi journalist who went missing in Turkey this month. The kingdom's response could include halting oil exports, selling off its US treasury holdings and turning to new arms suppliers.
As the world’s largest oil exporter and second-largest crude supplier to the US after Canada, Saudi Arabia can roil oil markets if it were to halt its sale of crude and products to Washington. This would be the first such measure since the 1973 oil embargo.
The Saudi authorities “have at their disposal tens of options [to retaliate],” said Abdulkhaleq Abdulla, a political science professor at the UAE University. “Some are not to the liking of the American or the world economy: investment is one but there is the mighty oil weapon.”
Tensions between Washington and Riyadh over the disappearance of Mr Khashoggi on October 2 after his visit to the Saudi consulate in Istanbul increased over the past week. US President Donald Trump told CBS on Saturday he would inflict "severe punishment" against Saudi Arabia if it was found to be behind Mr Khashoggi's disappearance. The kingdom rebutted on Sunday, saying it would "respond with greater action" given its "influential role in the global economy", the state-run Saudi Press Agency reported, citing an unnamed Saudi official.
Oil prices have already risen in response to rhetoric, with benchmark Brent trading above the $80-mark after climbing to a three-year high of $86 per barrel last week.
Crude prices have surged over the last few months after the US decided to re-impose sanctions on Iran, a major oil producer, leaving Saudi-led Opec and members of a global oil pact with the task to replace lost Iranian barrels as countries boycott Tehran for fear of falling afoul of Washington.
Saudi Arabia, which pumps 12.9 per cent of the world’s oil, is the only Opec member with substantial spare oil capacity that could be used to meet market demand. The kingdom could tame oil prices if they were to hit $100 per barrel as some analysts have forecast with the onset of US sanctions against Iran on November 4.
Mr Trump's comments led to a market sell-off on the kingdom's Tadawul benchmark index this week. After shedding about 7 per cent on Sunday, the market rebounded at the end of trading the following day up 4.1 per cent. The uncertainty regarding Mr Khashoggi's fate has also led to a number of business executives like Virgin's Richard Branson and JP Morgan's Jamie Dimon as well as media partners withdrawing from an upcoming investment conference in Riyadh this month.
Possible US sanctions against Saudi Arabia could “unleash a wild bull [run] on oil prices,” said Iman Nasseri, managing director, Middle East at London-based Facts Global Energy.
“Should they decide to cut production by half a million or 1 million barrels a day, the market will be extremely tight and we should expect prices of $100+ easily.”
Any possible Saudi output cut would come as a blow to Mr Trump’s efforts to rein in prices ahead of his country’s mid-term elections in November. The possible curtailment of production by Saudi Arabia, which has in recent months boosted its exports to the US, partly in response to Mr Trump’s calls to slow the oil price rally will come amid declining supply from Iran.
Giovanni Staunovo, commodity analyst at Swiss bank UBS noted the market was pricing in some risk premium with traders closely watching Saudi crude exports until tensions between the US and Riyadh diffuse.
“Oil was not part of Saudi politics in recent years,” he said. “Considering that spare capacity is already extremely low, the oil market cannot afford another ‘accident’.”
The repercussions from potential US sanctions against Saudi Arabia will reverberate through the global economy as higher oil prices could stoke inflation.
“Naturally as a result of any sanctions inflation will rise in [the US] but given global economics this contagion in terms of impacts may spread to other countries who have renegotiated their tariffs and other trade issues with [the US],” said Theodore Karasik, senior advisor at Washington-based consultancy Gulf State Analytics.
Besides the oil weapon, Saudi Arabia is the tenth largest holder of US treasury securities as of July this year, with $166.8 billion, according to figures from the US Treasury Department.
The kingdom “is in much the same position as China is or perhaps Japan back in the 1980s when the ownership of US treasuries was used as a tool in terms of foreign policy and relationships,” said Mr Karasik. “Selling US treasuries coupled with adjustments in the oil market can create an impact on the US stock market. However the problem is that this may lead to a global flu.”
Saudi Arabia also has vast investments in the US. The Public Investment Fund, the Saudi sovereign wealth fund, has made 34 investments in the US, including a $3.5 billion stake in ride hailing firm Uber, a five per cent stake in car maker Tesla, and a $1bn investment in Tesla rival Lucid Motors.
Last year, US private equity firm Blackstone and PIF agreed to set up a $40bn vehicle to invest in infrastructure projects, mainly in the US.
If the situation escalates Saudi companies could also shun American firms and markets. There are already calls, most notably on Monday by Bahrain's top diplomat and UAE businessmen to boycott US companies like Uber whose chief executive pulled out of the upcoming Saudi investment conference. Amid such heightened times, Saudi companies like Prince Alwaleed's Kingdom Holding, which has stakes in Citi, Uber and Twitter could enter the fray and divest.
Another potential impact could come from Saudi Arabia’s arms purchases.
Last year Saudi Arabia was the third largest military spender in the world after the US and China, accounting for 4 per cent of global military expenditure, according to figures from the Stockholm International Peace Research Institute. The kingdom sources a big chunk of its military purchases from the US, which clinched a $350bn arms with Riyadh in May last year.
Law%2041.9.4%20of%20men%E2%80%99s%20T20I%20playing%20conditions
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The past Palme d'Or winners
2018 Shoplifters, Hirokazu Kore-eda
2017 The Square, Ruben Ostlund
2016 I, Daniel Blake, Ken Loach
2015 Dheepan, Jacques Audiard
2014 Winter Sleep (Kış Uykusu), Nuri Bilge Ceylan
2013 Blue is the Warmest Colour (La Vie d'Adèle: Chapitres 1 et 2), Abdellatif Kechiche, Adele Exarchopoulos and Lea Seydoux
2012 Amour, Michael Haneke
2011 The Tree of Life, Terrence Malick
2010 Uncle Boonmee Who Can Recall His Past Lives (Lung Bunmi Raluek Chat), Apichatpong Weerasethakul
2009 The White Ribbon (Eine deutsche Kindergeschichte), Michael Haneke
2008 The Class (Entre les murs), Laurent Cantet
SPECS
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2-litre%204-cylinder%20petrol%20(V%20Class)%3B%20electric%20motor%20with%2060kW%20or%2090kW%20powerpack%20(EQV)%0D%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20233hp%20(V%20Class%2C%20best%20option)%3B%20204hp%20(EQV%2C%20best%20option)%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20350Nm%20(V%20Class%2C%20best%20option)%3B%20TBA%20(EQV)%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3EMid-2024%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3ETBA%0D%3C%2Fp%3E%0A
MISSION: IMPOSSIBLE – FINAL RECKONING
Director: Christopher McQuarrie
Starring: Tom Cruise, Hayley Atwell, Simon Pegg
Rating: 4/5
DC%20League%20of%20Super-Pets
%3Cp%3EDirector%3A%20Jared%20Stern%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Dwayne%20Johnson%2C%20Kevin%20Hart%2C%20John%20Krasinski%2C%20Keanu%20Reeves%2C%20Olivia%20Wilde%2C%20Kate%20McKinnon%2C%20Jameela%20Jamil%3C%2Fp%3E%0A%3Cp%3ERating%3A%203%2F5%3C%2Fp%3E%0A
ASSASSIN'S%20CREED%20MIRAGE
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More from Mohammed Alardhi
Specs
Engine: 2-litre
Transmission: Eight-speed automatic
Power: 255hp
Torque: 273Nm
Price: Dh240,000
The years Ramadan fell in May
Killing of Qassem Suleimani
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Specs
Price, base: Dhs850,000
Engine: 3.9-litre twin-turbo V8
Transmission: Seven-speed automatic
Power: 591bhp @ 7,500rpm
Torque: 760Nm @ 3,000rpm
Fuel economy, combined: 11.3L / 100km
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
More coverage from the Future Forum
Mohammed bin Zayed Majlis
The biog
Family: wife, four children, 11 grandchildren, 16 great-grandchildren
Reads: Newspapers, historical, religious books and biographies
Education: High school in Thatta, a city now in Pakistan
Regrets: Not completing college in Karachi when universities were shut down following protests by freedom fighters for the British to quit India
Happiness: Work on creative ideas, you will also need ideals to make people happy
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Killing of Qassem Suleimani
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
New process leads to panic among jobseekers
As a UAE-based travel agent who processes tourist visas from the Philippines, Jennifer Pacia Gado is fielding a lot of calls from concerned travellers just now. And they are all asking the same question.
“My clients are mostly Filipinos, and they [all want to know] about good conduct certificates,” says the 34-year-old Filipina, who has lived in the UAE for five years.
Ms Gado contacted the Philippines Embassy to get more information on the certificate so she can share it with her clients. She says many are worried about the process and associated costs – which could be as high as Dh500 to obtain and attest a good conduct certificate from the Philippines for jobseekers already living in the UAE.
“They are worried about this because when they arrive here without the NBI [National Bureau of Investigation] clearance, it is a hassle because it takes time,” she says.
“They need to go first to the embassy to apply for the application of the NBI clearance. After that they have go to the police station [in the UAE] for the fingerprints. And then they will apply for the special power of attorney so that someone can finish the process in the Philippines. So it is a long process and more expensive if you are doing it from here.”
'Hocus%20Pocus%202'
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The biog
Fatima Al Darmaki is an Emirati widow with three children
She has received 46 certificates of appreciation and excellence throughout her career
She won the 'ideal mother' category at the Minister of Interior Awards for Excellence
Her favourite food is Harees, a slow-cooked porridge-like dish made from boiled wheat berries mixed with chicken
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Retirement funds heavily invested in equities at a risky time
Pension funds in growing economies in Asia, Latin America and the Middle East have a sharply higher percentage of assets parked in stocks, just at a time when trade tensions threaten to derail markets.
Retirement money managers in 14 geographies now allocate 40 per cent of their assets to equities, an 8 percentage-point climb over the past five years, according to a Mercer survey released last week that canvassed government, corporate and mandatory pension funds with almost $5 trillion in assets under management. That compares with about 25 per cent for pension funds in Europe.
The escalating trade spat between the US and China has heightened fears that stocks are ripe for a downturn. With tensions mounting and outcomes driven more by politics than economics, the S&P 500 Index will be on course for a “full-scale bear market” without Federal Reserve interest-rate cuts, Citigroup’s global macro strategy team said earlier this week.
The increased allocation to equities by growth-market pension funds has come at the expense of fixed-income investments, which declined 11 percentage points over the five years, according to the survey.
Hong Kong funds have the highest exposure to equities at 66 per cent, although that’s been relatively stable over the period. Japan’s equity allocation jumped 13 percentage points while South Korea’s increased 8 percentage points.
The money managers are also directing a higher portion of their funds to assets outside of their home countries. On average, foreign stocks now account for 49 per cent of respondents’ equity investments, 4 percentage points higher than five years ago, while foreign fixed-income exposure climbed 7 percentage points to 23 per cent. Funds in Japan, South Korea, Malaysia and Taiwan are among those seeking greater diversification in stocks and fixed income.
• Bloomberg
Scoreline
Arsenal 3
Aubameyang (28'), Welbeck (38', 81')
Red cards: El Neny (90' 3)
Southampton 2
Long (17'), Austin (73')
Red cards: Stephens (90' 2)
How to donate
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
Killing of Qassem Suleimani
Match info
Champions League quarter-final, first leg
Liverpool v Porto, Tuesday, 11pm (UAE)
Matches can be watched on BeIN Sports
Who has been sanctioned?
Daniella Weiss and Nachala
Described as 'the grandmother of the settler movement', she has encouraged the expansion of settlements for decades. The 79 year old leads radical settler movement Nachala, whose aim is for Israel to annex Gaza and the occupied West Bank, where it helps settlers built outposts.
Harel Libi & Libi Construction and Infrastructure
Libi has been involved in threatening and perpetuating acts of aggression and violence against Palestinians. His firm has provided logistical and financial support for the establishment of illegal outposts.
Zohar Sabah
Runs a settler outpost named Zohar’s Farm and has previously faced charges of violence against Palestinians. He was indicted by Israel’s State Attorney’s Office in September for allegedly participating in a violent attack against Palestinians and activists in the West Bank village of Muarrajat.
Coco’s Farm and Neria’s Farm
These are illegal outposts in the West Bank, which are at the vanguard of the settler movement. According to the UK, they are associated with people who have been involved in enabling, inciting, promoting or providing support for activities that amount to “serious abuse”.
Company%20profile
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Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
Brief scoreline:
Liverpool 2
Keita 5', Firmino 26'
Porto 0
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