Fears of SVB’s Collapse Having Repercussions on Arab Countries

 Anticipation for disclosures of the investment sectors and financial activities in the Arab countries due to the resounding bankruptcy of the Silicon Valley Bank (Reuters)
Anticipation for disclosures of the investment sectors and financial activities in the Arab countries due to the resounding bankruptcy of the Silicon Valley Bank (Reuters)
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Fears of SVB’s Collapse Having Repercussions on Arab Countries

 Anticipation for disclosures of the investment sectors and financial activities in the Arab countries due to the resounding bankruptcy of the Silicon Valley Bank (Reuters)
Anticipation for disclosures of the investment sectors and financial activities in the Arab countries due to the resounding bankruptcy of the Silicon Valley Bank (Reuters)

The collapse of the California-based Silicon Valley Bank (SVB) has fueled fears among customers, depositors, and technology companies regarding the economic level in the US. They also worry about the announced bankruptcy having a contagion effect in wider regions of the world.

The Arab region does not seem immune to the repercussions, as banks in Kuwait disclosed minor exposures to SVB's bankruptcy.

Arab world banks and investment institutions have expressed caution towards SVB’s economic failure.

The fallout of SVB's insolvency will widen, specialists told Asharq Al-Awsat, adding that its impact will reach the business environment and the banking sector worldwide.

Experts noted that the business and financial environments in the Arab and Gulf regions would each be affected differently.

“SVB’s collapse highlights potential risks to the financial sector and potential implications for global financial stability,” said Fadel bin Saad al-Buainain, Saudi Shura Council member.

“Whatever has been said about controlling the bank’s crisis and limiting its repercussions on the banking system, that saying lacks relevance for two reasons,” he added.

The two reasons cited by al-Buainain include the overlapping of the components of financial sectors, which aggravates exposure to risks, and panic driving depositors to withdraw their money out of fear of being written off due to the bankruptcy of banks.

“I think that the panic that afflicted depositors may have an impact that exceeds the impact of the collapse of the bank,” revealed al-Buainain.

“We find that panic hit financial markets and made investors more cautious,” he added, noting that “this may dry up the market and increase repercussions.”

Al-Buainain clarified that raising interest rates had made investors less willing to invest and take risks and that the tightening of monetary policy may be one of the causes of what happened recently.



China's Iran Oil Imports Surge in June on Rising Shipments, Teapot Demand

FILE PHOTO: An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS
FILE PHOTO: An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS
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China's Iran Oil Imports Surge in June on Rising Shipments, Teapot Demand

FILE PHOTO: An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS
FILE PHOTO: An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS

China's Iranian oil imports surged in June as shipments accelerated before the recent conflict in the region and demand from independent refineries improved, analysts said.

The world's top oil importer and biggest buyer of Iranian crude brought in more than 1.8 million barrels per day (bpd) from June 1-20, according to ship-tracker Vortexa, a record high based on the firm's data.

Kpler's data put the month-to-date average of China's Iranian oil and condensate imports at 1.46 million bpd as of June 27, up from one million bpd in May.

The rising imports are fueled in part by the accelerated discharge of high volumes of Iranian oil on the water after export loadings from Iran reached a multi-year high of 1.83 million bpd in May, Kpler data showed.

It typically takes at least one month for Iranian oil to reach Chinese ports, Reuters reported.

Robust loadings in May and early June mean China's Iran imports are poised to remain elevated, Kpler and Vortexa analysts said.

Independent Chinese "teapot" refineries, the main buyers of Iranian oil, also showed strong demand for the discount barrels as their stockpiles depleted, said Xu Muyu, Kpler's senior analyst.

A possible relaxing of US President Donald Trump's policy on Iranian oil sanctions could further bolster Chinese buying, she added.

Trump said on Wednesday that Washington has not given up its maximum pressure campaign on Iran - including restrictions on Iranian oil sales - but signaled a potential easing in enforcement to help the country rebuild.

For this week, Iranian Light crude oil was being traded at around $2 a barrel below ICE Brent for end-July to early-August deliveries, two traders familiar with the matter said, compared to discounts of $3.30-$3.50 a barrel previously for July deliveries.

Narrower discounts were spurred by worries that oil flows could be disrupted through the Strait of Hormuz, a critical waterway between Iran and Oman, traders said.

Market fears for a closure of the chokepoint had escalated after last weekend's US attack on Iranian nuclear sites but eased after Iran and Israel on Tuesday signaled a ceasefire.

Tighter discounts for Iranian oil come amid a retreat in futures prices. ICE Brent crude futures hovered at $68 per barrel on Friday, their level before the Israel-Iran conflict began and down 19% from Monday's five-month peak.