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Power Crisis Stifles the Lebanese Amid Lack of Feasible Solutions

Zouk Power Station is seen in Zouk, north of Beirut, Lebanon March 27, 2019. Picture taken March 27, 2019. REUTERS/Mohamed Azakir
Zouk Power Station is seen in Zouk, north of Beirut, Lebanon March 27, 2019. Picture taken March 27, 2019. REUTERS/Mohamed Azakir
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Power Crisis Stifles the Lebanese Amid Lack of Feasible Solutions

Zouk Power Station is seen in Zouk, north of Beirut, Lebanon March 27, 2019. Picture taken March 27, 2019. REUTERS/Mohamed Azakir
Zouk Power Station is seen in Zouk, north of Beirut, Lebanon March 27, 2019. Picture taken March 27, 2019. REUTERS/Mohamed Azakir

Lebanon’s electricity crisis severely worsened over the past few days, with power outages extending to 20 hours per day even in the capital.

Many generator owners have raised the monthly tariff because of the high cost of diesel and reduced subscription hours, which drowned several areas in total darkness that was only broken by candlelight.

The electricity crisis prompted a number of stores, especially small ones, to stop buying food commodities that need a refrigerator.

Minister of Energy Raymond Ghajar said that power rationing was due to the lack of fuel, citing “judicial reasons” behind the delay of delivery by fuel ships.

In response, member of the Progressive Socialist Party (PSP) and electricity expert Mohammed Basbous stressed that the ministry was required to provide further information on the matter.

“It’s surprising that we currently face an electricity crisis, especially since the Algerian Sonatrach company announced that it would commit to supplying Lebanon with the amount of fuel it needs and would refrain from renewing the contract at the end of the year,” he told Asharq Al-Awsat.

“The electricity crisis was supposed to start at the end of the year and not now, if no alternatives were found,” he emphasized.

Basbous asked about the reason why additional quantities were not brought from the Kuwait Petroleum Corporation, which has a similar contract to that of Sonatrach with the Lebanese state.

The Minister of Energy had announced that Iraq intended to supply Lebanon with fuel in exchange for food, Lebanese commodities and medicine. But Basbous stressed that this was not a feasible solution, due to the scarcity of food in the country, as factories were struggling to maintain their operation amid a severe financial and economic crisis.

The PSP member underlined that the lack of fuel and its high price were due to smuggling, as there are “lines of trucks that leave daily from the refineries and go directly to the border with Syria.”

He noted that the only solution was a government decision to immediately launch the comprehensive reform process, starting from the electricity and fuel issue, in addition to controlling cross-border smuggling.

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Business

Gulf Markets Jump on US-Iran Ceasefire Agreement

A man follows the stock market at the Dubai Financial Market in Dubai (EPA)
A man follows the stock market at the Dubai Financial Market in Dubai (EPA)
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Gulf Markets Jump on US-Iran Ceasefire Agreement

A man follows the stock market at the Dubai Financial Market in Dubai (EPA)
A man follows the stock market at the Dubai Financial Market in Dubai (EPA)

Stock markets in the Gulf region jumped on Wednesday in line with global equities after US President Donald Trump agreed to a two-week ceasefire with Iran on Tuesday.

Trump said the last-minute deal was subject to Iran's agreement to pause its blockade of oil and gas supplies through the Strait of Hormuz, which before the war typically handled about one-fifth of global oil and liquefied natural gas shipments.

Iranian Foreign Minister Abbas Araqchi said Tehran would cease counter-attacks and provide safe passage through the waterway if attacks against it stopped.

Pakistani Prime Minister Shehbaz Sharif ⁠said he had ⁠invited Iranian and US delegations to meet in Islamabad on Friday.

Saudi Arabia's benchmark index opened 1.4% higher, lifted by gains in banking and energy stocks.

Oil giant Saudi Aramco gained 2.1%, while largest lender Al Rajhi Bank added 2.4%.

Dubai's main market spiked as much as 8.5%, its highest intraday gain in more than 11 years, with the heavyweight real estate and financial sectors outperforming.

At 0730 GMT the Dubai index was trading 6.4% higher, led by a 9.8% jump in blue-chip developer Emaar Properties and an 11.3% rise in top lender Emirates NBD ⁠Bank.

Abu Dhabi's benchmark index climbed as much as 4.9% in early trade, its biggest jump in six years, boosted by gains in the financial, real estate, logistics and energy sectors.

At 0730 GMT the Abu Dhabi index was up 3.2% with the largest lender, First Abu Dhabi Bank, rising 8.3% and real estate giant Aldar Properties jumping 8.8%.

Energy firm Adnoc Gas gained 3.8%, while Abu Dhabi Ports Company advanced 9.8%.

In Qatar, the index jumped 3.4%, as all its constituents advanced, led by energy shares.

Petrochemical maker Industries Qatar jumped 6.2% and Qatar Gas Transport surged 8%, the top gainer.

The Gulf's biggest lender, Qatar National Bank, climbed 3.7%.

Business

Gulf Banks Weather Geopolitical Tensions with Strong Capital Buffers

A Saudi money changer displays Saudi Riyal banknotes at a currency exchange shop in Riyadh, Saudi Arabia July 27, 2017. (Reuters)
A Saudi money changer displays Saudi Riyal banknotes at a currency exchange shop in Riyadh, Saudi Arabia July 27, 2017. (Reuters)
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Gulf Banks Weather Geopolitical Tensions with Strong Capital Buffers

A Saudi money changer displays Saudi Riyal banknotes at a currency exchange shop in Riyadh, Saudi Arabia July 27, 2017. (Reuters)
A Saudi money changer displays Saudi Riyal banknotes at a currency exchange shop in Riyadh, Saudi Arabia July 27, 2017. (Reuters)

Gulf banks are holding up well despite rising geopolitical tensions in the Middle East, underpinned by solid financial positions and early regulatory action, though the full impact on the sector has yet to emerge.

Mohamed Damak, managing director at S&P Global Ratings, told Asharq Al-Awsat there have been no significant capital outflows from the region’s banks so far. Any deterioration in asset quality, he said, would take time to show up in financial results.

A recent S&P Global Ratings report reached similar conclusions, noting that operations remain stable and asset quality indicators have yet to weaken, although pressures could build in the months ahead.

The agency’s baseline scenario assumes disruptions will persist in parts of the region, even if the most acute phase subsides within weeks.

Supply chain bottlenecks, port congestion and delays in insurance services could linger, while security risks along shipping routes may weigh on trade and keep inflation elevated.

That, in turn, could affect sectors such as transport, tourism, real estate and retail — with knock-on effects for banks’ asset quality and growth.

Still, Damak said regulatory easing measures introduced by some authorities, combined with banks’ strong fundamentals, should help cushion part of the impact.

He pointed to robust balance sheets across the region: average Tier 1 capital stands at about 17.1 percent, non-performing loans at roughly 2.5 percent, and provisioning coverage near 158.7 percent among the 45 largest banks.

Liquidity levels also remain comfortable, giving banks room to absorb shocks, even if funding conditions tighten or certain sectors come under strain.

Authorities across the Gulf have moved quickly to shore up financial stability, broadly echoing measures seen in Europe, the United States and parts of East Asia.

Qatar’s central bank has introduced unlimited repo facilities in riyals, alongside overnight and three-month funding options, to support liquidity management and borrowers.

In Kuwait, the central bank eased liquidity and capital requirements, including the liquidity coverage ratio and net stable funding ratio, while raising lending ceilings and funding gap limits to support credit growth.

In the United Arab Emirates, banks have drawn on emergency liquidity facilities, borrowing against a range of collateral as part of broader efforts to sustain lending and liquidity in the system.

At the same time, banks have activated contingency plans, shifting to remote operations, scaling back branch networks and relying on backup data centers to reduce operational risks.

Uncertainty continues to dominate the outlook. But with strong capital, ample liquidity and regulatory support, Gulf banks appear well placed to withstand the current turbulence — even if a prolonged disruption could test the sector more severely.

Business

Gold Climbs to Nearly 3-week High after Ceasefire Announcement

A saleswoman adjusts gold jewelry on display for sale in a store in Jiangsu Province, eastern China (AFP)
A saleswoman adjusts gold jewelry on display for sale in a store in Jiangsu Province, eastern China (AFP)
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Gold Climbs to Nearly 3-week High after Ceasefire Announcement

A saleswoman adjusts gold jewelry on display for sale in a store in Jiangsu Province, eastern China (AFP)
A saleswoman adjusts gold jewelry on display for sale in a store in Jiangsu Province, eastern China (AFP)

Gold prices climbed to a nearly three-week high on Wednesday as markets reassessed near-term risks after US President Donald Trump agreed to suspend bombings and attacks on Iran for two weeks, easing fears of energy-driven inflation.

Spot gold was up 2.5% at $4,819.52 per ounce, as of 0726 GMT. Earlier in the session, bullion rose more than 3% to its highest level since March 19.

US gold futures for ⁠June delivery gained ⁠3.4% to $4,845.30, Reuters reported.

Trump said Washington had agreed to a two-week pause in attacks and received what he described as a "workable" 10-point proposal from Iran as a basis for negotiations.

His comments followed earlier warnings that Tehran must reopen the Strait of Hormuz or risk US retaliation on its civilian infrastructure.

"People went into this session thinking that escalation ⁠was very likely, but the announcement of a two-week truce kind of upended that expectation and that was gold positive," said Nicholas Frappell, global head of institutional markets at ABC Refinery.

Iran's Supreme Security Council said negotiations with the United States would begin on April 10 in Islamabad after it submitted its proposal via Pakistan, adding that talks did not signal an end to the war.

Meanwhile, rising energy prices could fuel inflation and complicate central banks' interest rates decision.

While gold is often seen as a hedge against inflation and uncertainty, its appeal ⁠tends to ⁠weaken in a high-interest-rate environment as it offers no yield.

Markets are now awaiting minutes of the Federal Reserve's March meeting later in the day.

Gold, which began the year on a strong note, has fallen more than 8% since the Iran war erupted on February 28.

"This is a knee-jerk relief rally and it remains to be seen if Iran complies. For gold, the 200 day-moving-average at $4,930 and then $5,000 will be key hurdles. Similarly, $80-$81 is an important level for silver," independent metals trader Tai Wong said.

Spot silver jumped 5.8% to $77.16 per ounce, platinum gained 4% to $2,036.30 and palladium added 4.6% at $1,537.75.