Saudi Arabia’s Move to Join BRICS Grants it Greater Economic Expansion

A photo of the new BRICS New Development Bank (NDB) at its headquarters in Shanghai, China. (Reuters)
A photo of the new BRICS New Development Bank (NDB) at its headquarters in Shanghai, China. (Reuters)
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Saudi Arabia’s Move to Join BRICS Grants it Greater Economic Expansion

A photo of the new BRICS New Development Bank (NDB) at its headquarters in Shanghai, China. (Reuters)
A photo of the new BRICS New Development Bank (NDB) at its headquarters in Shanghai, China. (Reuters)

Economic analysts have emphasized that Saudi Arabia’s expected move to join the BRICS group as an observer will grant the Kingdom the ability to participate in some of its economic activities.

The group is expected to meet in August.

This move is also expected to strengthen Saudi Arabia’s trade and economic relationships while reaffirming its commitment to global economic openness and the prudent management of economic ties.

Dr. Mohammed Makni, a finance and investment professor at Imam Mohammad Ibn Saud Islamic University in Saudi Arabia, told Asharq Al-Awsat that since its inception, the BRICS group has sought to shift economic power from a single to multiple directions.

The bloc is significant for comprising around 41% of the world's population and 29% of the world’s land area. Additionally, its members are part of the G20, representing the world’s largest 20 growing economies.

Makni further added that Saudi Arabia’s inclusion will open new paths and significant opportunities for the Kingdom’s economy and the Gulf markets, leading to expansion and increased global economic stability.

Saudi Arabia will also play a crucial role among the group’s nations, particularly in the trade of oil and gas, which constitutes 30% of the Kingdom's exports to global markets.

Makni also added that Saudi Arabia is open to all, and its policies are not limited to a Western-oriented approach.

He pointed out that the country had joined the Shanghai Cooperation Organization for Economic and Security Cooperation in March 2022.

This move, Makni emphasized, will not affect the strong relations between Riyadh and Washington, as well as other Western countries.

It serves to affirm the strength and resilience of the Saudi economy and the Kingdom’s capability and wisdom in managing its relationships with various nations while maintaining a balance of interests to achieve the strategic goals of Vision 2030.

Moreover, Makni emphasized that this membership will infuse a new vitality into the economies of the member states amid the ongoing global economic crises and reshaping of economic powers.

It will also create opportunities for the BRICS nations to enter the markets of the Gulf region, especially given the urgent need for the two largest economies in the group, China and India, to access Gulf energy markets in order to sustain growth and move towards global economic leadership.

The BRICS group is a global economic bloc comprising the countries of Brazil, Russia, India, China, and South Africa. BRICS is an acronym derived from the initial letters of these nations’ names.

Currently, South Africa is chairing the group, and it will host the 15th summit of the bloc from August 22 to 24.



Oil Slips as Iran-Israel Conflict Enters Sixth Day

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
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Oil Slips as Iran-Israel Conflict Enters Sixth Day

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo

Oil prices fell on Wednesday, after a gain of 4% in the previous session, as markets weighed up the chance of supply disruptions from the Iran-Israel conflict and as they ponder a direct US involvement.

Brent crude futures fell 93 cents, or 1.2%, to $75.52 a barrel by 0918 GMT. US West Texas Intermediate crude futures fell 88 cents, also 1.2%, to $73.96 per barrel.

US President Trump warned on social media on Tuesday that US patience was wearing thin, and called for an "unconditional surrender" from Iran.

While he said there was no intention to kill Iran's leader Ali Khamenei "for now," his comments suggested a tougher stance toward Iran as he weighs whether to deepen US involvement.

A source familiar with internal discussions said one of the options Trump and his team are considering included joining Israel on strikes against Iranian nuclear sites.

A direct US involvement threatens to widen the confrontation further, putting energy infrastructure in the region at higher risk of attack, analysts say.

"The biggest fear for the oil market is the shutdown of the Strait of Hormuz," ING analysts said in a note.

"Almost a third of global seaborne oil trade moves through this chokepoint. A significant disruption to these flows would be enough to push prices to $120 [a barrel]," the bank added.

Iran is OPEC's third-largest producer, extracting about 3.3 million barrels per day (bpd) of crude oil.

Meanwhile, Iranian ambassador to the United Nations in Geneva Ali Bahreini said on Wednesday that Tehran has conveyed to Washington that it will respond firmly to the United States if it becomes directly involved in Israel's military campaign.

Markets are also looking ahead to a second day of US Federal Reserve discussions on Wednesday, in which the central bank is expected to leave its benchmark overnight interest rate in the range of 4.25% to 4.50%.

However, the conflict in the Middle East and the risk of slowing global growth could potentially push the Fed to cut rates by 25 basis points in July, sooner than the market's current expectation of September, said Tony Sycamore, market analyst with IG.

Lower interest rates generally boost economic growth and demand for oil.

Confounding the decision for the Fed, however, is the Middle East conflict's potential creation of a new source of inflation via surging oil prices.

US crude stocks fell by 10.1 million barrels in the week ended June 13, market sources told Reuters, citing American Petroleum Institute figures on Tuesday. Official Energy Information Administration data is due later on Wednesday.