Corona virus threatens the Kingdom

The new Corona virus threatens the Kingdom with losses that would exacerbate the Kingdom’s already worsening economic crisis due to the failure of the Al Saud regime and the faltering economic policies.

Oil prices have fallen by more than $11 a barrel this year to $54, which bedevils producers with the spread of the Corona virus, which has killed more than a thousand people in China.

The Reuters news agency revealed that the Saudi authorities want international oil producers to agree to a rapid reduction in supplies in light of the impact of the Corona virus in China on demand, knowing that delays in the past led to costly collapses in prices.

According to the agency, the Kingdom is working to convince the “OPEC” producers and their allies, led by Russia, a group known as “OPEC +”, that they need to act sooner rather than later.

The sources said that the Kingdom expects that the impact on oil demand is likely to be greater this time than the severe acute respiratory syndrome (SARS) epidemic in 2002 and 2003, due to China’s most important current role in the global economy.

A source in the “OPEC” said that Riyadh wanted a rapid reduction of the supply in order to “put an end to the decline in prices,” adding that “the Saudis want to anticipate and keep oil prices at $60 a barrel or more.”

A source familiar with Saudi oil thinking said that “OPEC +” may have lost this valuable time this time to prevent a drop in the price of oil, which increases the bet that Moscow and the rest of the producers will support a possible reduction.

One of the sources said, “It is about taking proactive measures against future fogs … It is about lessons learned from the past.”

On Tuesday, Russian Energy Minister Alexander Novak said that Russia is still studying the increase proposed by the committee in reducing oil production, while the delay in the Russian response frustrates some of the players in “OPEC”.

On Tuesday, the US Energy Information Administration reduced its forecast for the growth of global oil demand this year by 310 thousand barrels per day with the decline in crude consumption in China, the second largest economy in the world, after the outbreak of the Corona virus.

PK Verlager Energy Advisors said in a research note, “Saudi officials are aware that consumption will decrease. They also know that even though the effect of the Corona virus is uncertain, the markets are responding.”

A technical committee advising OPEC + recommended, last week, an additional immediate production cut of 600,000 bpd, and extend the deadline for this agreement until the end of 2020.

A current agreement for “OPEC +” aims to reduce production by 1.7 million barrels per day until the end of March, and Saudi Arabia voluntarily cut an additional 400,000 barrels, which means that OPEC + actually reduces production by 2.1 million barrels per day.

This comes as the Kingdom’s benchmark index fell one percent, after most of the banks ’shares fell on it, including Al-Rajhi Bank, which fell 2.6 percent.

Al-Rajhi Bank announced annual profits of 10.16 billion riyals (2.71 billion dollars), compared to 3.77 billion in the previous year. But the figure came below the average analyst estimate of 10.64 billion riyals, according to the financial statements of British company Refinitiv.

The shares of Mobile Telecommunications Company (Zain Saudi Arabia) fell 9.9 percent, to become the biggest loser on the index. The company’s share suffered its biggest loss during the day since May 2018, a day after it ended talks with the Ministry of Finance aimed at converting the company’s debts owed to the ministry into shares.

Soon, the Japanese SoftBank Group said operating profit in the fourth quarter was 99% lower than analysts’ estimates due to losses in the $100 billion “Vision” fund.

The Vision Fund had an operating loss of 225 billion yen ($2.05 billion) in the fourth quarter, compared to a profit of 176 billion yen, a year earlier.

Profits of the group as a whole were 2.6 billion yen from October to December, compared to 438 billion a year earlier, according to the company that invests in technology in a stock exchange disclosure.

The Ruya Fund said it had invested $74.6 billion in 88 companies, as of the end of December, and that the value of those investments had reached $79.8 billion at the end of the year.

Last November, the company announced that it incurred operating losses of 704 billion yen ($6.46 billion) in the period from July to September, and Softbank recorded operating profits of 706 billion yen in the same period. Year 2018.

The investment group said at the time that its $ 100 billion “Vision” fund recorded an unrealized loss of 537.9 billion yen (approximately $5 billion) in the first six months of 2019, given the value of its investments in the technology sector. , Such as “WeiWork” and “Uber”.

The Saudi sovereign wealth fund has contributed forty billion dollars to the “Vision” fund, which has become one of the main sources of financing for technology companies around the world.

SoftBank collects one hundred billion dollars for the “Second Vision” fund, and Saudi Crown Prince Muhammad bin Salman said that the Saudi sovereign fund will contribute $45 billion to it.