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Oil Extends Gains on Escalation in Middle East Tensions

A pump jack lifts oil out of a well during a sandstorm in Midland, Texas, US, April 13, 2018. Picture taken April 13, 2018. (Reuters)
A pump jack lifts oil out of a well during a sandstorm in Midland, Texas, US, April 13, 2018. Picture taken April 13, 2018. (Reuters)
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Oil Extends Gains on Escalation in Middle East Tensions

A pump jack lifts oil out of a well during a sandstorm in Midland, Texas, US, April 13, 2018. Picture taken April 13, 2018. (Reuters)
A pump jack lifts oil out of a well during a sandstorm in Midland, Texas, US, April 13, 2018. Picture taken April 13, 2018. (Reuters)

Oil prices extended gains on Thursday, after rising a dollar a barrel in the prior session, as investors braced for a worsening of the Middle East crisis, potentially involving Iran, the third-largest oil producer in OPEC.
Brent crude futures advanced by 30 cents, or 0.3%, to $90.78 a barrel by 0325 GMT, while US West Texas Intermediate crude futures rose 25 cents, or 0.3%, to $86.46 a barrel, Reuters reported.
Both contracts rose more than 1% in the prior session after three sons of a Hamas leader were killed in an Israeli airstrike in Gaza, feeding worries that ceasefire talks between the two sides might stall. Earlier this week, Israel and Hamas began a fresh round of negotiations in their more than six-month-old Gaza war but those discussions have yielded no agreement.
"Prices remain sensitive to geopolitical developments in the Middle East, with market participants pricing for the risks of supply disruptions if tensions were to drag for longer," said Yeap Jun Rong, market strategist at IG.
"This aids to offset some risk-off sentiments overnight, as markets recalibrate their rate expectations to price out a June rate cut and for rates to be kept high for longer until September," added Yeap, referring to US interest rates.
Higher-for-longer rates could dampen economic growth and suppress demand for oil.
Minutes from the US Federal Reserve showed officials worried that progress on inflation might have stalled and a longer period of tight monetary policy would be needed to tame inflation in the world's largest economy.
Investors who had earlier expected a rate cut in June now see September as a likelier timing for the easing cycle to begin, following a third straight stronger-than-forecast reading on consumer inflation.
Yeap added that oil's upward trend may persist as the Middle East geopolitical situation remains tricky.
The region is on alert for possible Iranian retaliation over a suspected Israeli airstrike on Iran's embassy in Syria at the start of the month. A Bloomberg report on Wednesday said the US and its allies believe major missile or drone strikes by Iran or its proxies against Israel are imminent.
US Secretary of State Antony Blinken has told Israeli Defense Minister Yoav Gallant that the United States will stand with Israel against any threats by Iran, the US State Department said later on Wednesday.
"The market has become increasingly concerned that the Israel-Hamas war could escalate across the Middle East, putting oil supply at risk," ANZ analyst Daniel Hynes said.
Oil traders will also be looking out for a monthly oil market report from the Organization of the Petroleum Exporting Countries (OPEC) due later on Thursday, and the International Energy Agency's oil market report due on Friday.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.