TODAY: Etihad’s IPO moves forward + Trade wars at home and abroad

Good morning, folks. We have a packed issue this morning with key developments at home and abroad, but first, all eyes on Gaza…

THE BIG LOGISTICS STORY OVER THE WEEKEND- Turkey halted all trade with Israel on Thursday on the back of the “worsening humanitarian tragedy” in Gaza. This marks an escalation of an earlier spat which saw Turkey restrict some trade with Israel over its refusal to allow Turkish air drops of aid for Gaza and the country’s continued offensive on the territory. Israeli top diplomat Israel Katz responded by likening Erdogan to a “dictator” who has reneged on international trade agreements and sidelined his country’s business interests. Turkey and Israel were exploring avenues to boost cooperation prior to the outbreak of the war in Gaza on 7 October with bilateral trade hitting USD 6.8 bn in 2023.

The story grabbed a lot of ink in the international press: Reuters | AP | Bloomberg | The Financial Times | The New York Times | CNN | BBC | The Guardian

HAPPENING TODAY-

Aramco will release 1Q 2024 results. Analysts will be looking for guidance on how Opec+ production cuts could impact profitability and, as a result, the company’s plans to pay some USD 34 bn in performance-based dividends this year.

HAPPENINGTHIS WEEK-

Sharjah + Dubai trade missions are in Asia: A Sharjah Chamber of Commerce and Industry trade delegation led by Chairman Abdullah Sultan Al Owais is in India this week until Friday, 10 May, Wam reports. The mission will be looking to strengthen economic ties and explore potential investments. A Dubai International Chamber trade mission is also in Indonesia and Vietnam to help local companies grow in these markets, Wam reports.

The Saudi Smart Logistics exhibition and summit kicked off yesterday in Riyadh and will run until Thursday, 9 May. The trade fair gathers local and international suppliers, public officials, professionals, and logistics players for networking, exchanging know-how, and showcasing new technologies, products, and services.

WATCH THIS SPACE-

#1- Preparations are underway to begin construction on the Hafeet Railway linking Oman and the UAE, Oman Daily Observer reported on Saturday, citing comments made by Asyad Group CEO Abdul Rahman Al Hatemi. The freight train will carry a capacity load of over 25k tons of general cargo equivalent to over 270 standard containers and the line will have freight stations located at Suhar and Buraimi in Oman and Al Ain in the UAE, Al Hatemi said. The train will travel at 120 km per hour, covering the distance between Suhar and Al Ain in 47 minutes, and Suhar and Abu Dhabi in 100 minutes. Moving freight via the railway is expected to save 35% to 40% on the costs for alternative means of freight transport while slashing carbon emission, he added.

#2- UAE-based natural gas outfit Dana Gas has resumed operations at Kurdistan’s Khor Mor gas field, according to a Friday disclosure (pdf). The company’s production has been restored to normal levels following commitments from the Kurdistan Regional Government and Iraq’s Baghdad-based Federal Government to boost security and enhance defenses at the site, the disclosure added.

BACKGROUND- Dana Gas temporarily suspended operations following a drone attack that hit the Khor Mor gas field on 26 April. The attack resulted in four fatalities, eight injuries, and minor damage to facilities.

DISRUPTION WATCH-

Container shipping capacity between Asia and Europe could fall 20% in 2Q on the back of Red Sea disruptions, Reuters reports, citing Maersk. Attacks are reaching farther out, forcing vessels to reroute further away from the Red Sea, Maersk said in an advisory to customers. Continued diversions away from the Suez Canal are expected to incur a 15% to 20% shortfall in capacity between Asia and Europe in the second quarter, Maersk added.

Yemen’s Houthis will expand the scope of their attacks “immediately” to target Israel-bound vessels in the Mediterranean, according to a threat update (pdf) by British security firm Ambrey on Friday citing statements by the group. The Houthis possess drones capable of attacking Israel-linked shipping in the Eastern Mediterranean, however such attacks can be easily intercepted by Israeli and American air defenses with contributions from KSA and Egypt, Ambrey says. Some attacks may evade interception and attacks against Mediterranean targets will become more likely if Israel goes forward with an offensive on Rafah, Ambrey added.

Shipping giants aren’t worried yet: The “risk zone” associated with Houthi-led attacks has still not been expanded to include the Mediterranean, Reuters reports, citing German shipping giant Hapag Lloyd. Houthi attacks in the Red Sea and Gulf of Aden are stretching further out, prompting the carrier to avoid the area altogether, the newswire reports, citing emailed comments.

Egypt is expected to rake in USD 6.8 bn in Suez Canal revenues in FY 2023 – 2024, down 22.7% y-o-y, Arab News reports, citing IMF figures. Suez Canal receipts are expected to rebound to USD 10 bn in the following FY, the IMF said.

MARKET WATCH-

#1- Oil prices opened higher this morning in response to delays in securing a ceasefire between Israel and Hamas, Reuters reports. Brent crude futures bumped up 0.28% to USD 83.59 a barrel by 04.00 GMT, while US West Texas Intermediate (WTI) rose 0.31% to USD 78.72 a barrel, the newswire said. Market participants are pricing on the basis geopolitical tensions could potentially drag on longer, market strategists told Reuters.

ADNOC ups crude oil production capacity: The Abu Dhabi National Oil Company (Adnoc) has raised its crude oil production capacity to 4.85 mn barrels per day (bpd) from 4.65 mn bpd, Bloomberg reported on Thursday, citing the state-owned oil giant’s website. The hike brings Adnoc closer to its target to boost its crude oil production capacity to reach 5 mn bpd by 2027.

REMEMBER- OPEC+ is meeting soon: The production capacity increase comes a month ahead of an OPEC+ meeting, set to take place on 1 June in Vienna, where members of the alliance will discuss oil production output cuts and quotas for the rest of this year. The cartel is expected to prolong supply cuts through to the end of the year, with more evidence of the impact of cuts on the market needed before a change in policy, analysts told Bloomberg last week.

#2- Baltic Index gains, buoyed by capesize: The Baltic Exchange’s dry bulk sea freight index — which tracks rates for the capesize, panamax, and supramax vessel segments — was up 5.1% to 1,774 on Thursday, hitting a more than one week high, Reuters reported on Friday. Capesize rose 12.1% to 2,372, while panamax also inched up 0.9% to 1,863. Meanwhile, the smaller supramax segment shed 12 points to 1,466, marking its fourth consecutive fall.

#3-Drewery’s World Container Index (WCI) gained 1% to USD 2,725 per 40ft container for the week ending Thursday, and was up 55% y-o-y, maritime research and consultancy firm Drewry reported on Thursday. The latest WCI index is also 92% greater than the average 2019 pre-pandemic rate of USD 1,420 per 40 ft container. Meanwhile, the average YTD composite index stands at USD 3,230 per 40ft container, USD 519 above the 10 year average of USD 2,712, Drewry said.

DATA POINTS-

#1- Saudi exports to China fell 14% y-o-y in USD 14.4 bn in 1Q 2024, Mubasher reported on Sunday, citing Chinese government data. The Kingdom accounted for 35% of the total exports from GCC countries to Beijing in the first quarter. Meanwhile, Saudi’s imports from China rose 10.4% y-o-y during the quarter to USD 11.7 bn, the data showed.

Saudi Arabia Railways (SAR) moved 6.34 mn tonnes of goods and minerals via rail freight in Q1 2024, up 9% y-o-y, according to a statement.

And Saudi vehicle imports were up 40% y-o-y to 93.1k vehicles in 2023, SPA reports, citing Zakat, Tax and Customs Authority (ZATCA) spokesperson Hamoud Al Harbi. Top exporters of cars into the Kingdom were Japan, India, South Korea, US, and Thailand.

#2- Foreign goods transiting via Iran surged 47% y-o-y to 1.6 mn tons in April, Mehr reported on Friday, citing data from Iran’s customs.

CIRCLE YOUR CALENDAR-

The UAE will host The Airport Show from Tuesday, 14 May through to Thursday, 16 May in Dubai. The event brings together airport suppliers, airport service providers, aviation executives, and regional decision makers to explore current innovations and new technologies.

Iran will host the International Exhibition of Rail Transportation and Related Industries from Saturday 18 May to Tuesday 21 May in Tehran. The exhibition looks to attract domestic and international firms to showcase Iran’s local rail manufacturing capabilities and to acquaint industry players with developments made in the industry worldwide.

The UAE will host The Electric Vehicle Innovation Summit from Monday, 20 May to Wednesday, 22 May in Abu Dhabi. The event will see industry leaders come together to discuss sustainable mobility and tapping into groundbreaking advancements in electric vehicles while engaging with key decision-makers.

Barbados will host UNCTAD’s Global Supply Chain Forum from Tuesday, 21 May to Friday, 24 May in Bridgetown. UNCTAD is holding the event in collaboration with the Government of Barbados, which aims to evaluate the role global supply chains have in supporting economic growth, creating jobs, and reducing poverty. Global industry leaders, policymakers and experts will convene to discuss forthcoming issues and explore innovative solutions.

Oman will host the Comex Technology Show from Monday, 27 May to Saturday, 30 May in Muscat. The event will see representation from industry leaders and decision makers to showcase buyer potential in innovative technology, in transportation, logistics, energy and healthcare sectors.

Egypt will host ProPak MENA from Sunday, 26 May to Tuesday, 28 May in Cairo. The conference will see F&B manufacturing industry professionals network and discover the latest equipment and logistic solutions for processing and packaging.

Check out our full calendar at the bottom of this email for a comprehensive listing of upcoming news events and news triggers.