Rushing Clean Energy Could Stifle Everyone

Traffic at a gas station in central Paris (AFP)
Traffic at a gas station in central Paris (AFP)
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Rushing Clean Energy Could Stifle Everyone

Traffic at a gas station in central Paris (AFP)
Traffic at a gas station in central Paris (AFP)

In December 2021, the Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud warned that the world is heading towards an energy crisis if investments in the oil sector continue to decrease.

Prince Abdulaziz touted investment as the only way to preserve energy supplies and meet market needs.

Last week, the price of an oil barrel shot up to $140 per barrel. The price hike can be traced back to an increase in demand and a drop in supplies as well as political events the world is experiencing today, the most important of which is the Russian-Ukrainian war and the Iranian nuclear talks.

Prince Abdulaziz’s warning came in response to an international drive towards reducing investment in fossil fuels, gas and oil, which led to a decrease in direct and indirect investments in the energy sector, estimated at hundreds of billions of dollars from 2014 until 2021.

Companies Roll back Investments

A report issued by CleanTechnica – a US-based website specializing in clean energy - indicated that multinational companies’ volume of investments taken out of fossil fuels in 2014 amounted to about $52 billion. In 2018, it amounted to more than $125 billion.

In 2019, 1110 institutions with assets of more than 11 trillion dollars committed to getting rid of fossil fuels. The once strong industry started witnessing a steady decline in its position. Because of the decrease in the number of institutional investors, lower profits, and weak expectations, companies such as BP, Equinor and Repsol wrote off a total of more than $11 billion in North American shale oil assets.

In 2020, 42 investment institutions from 14 countries announced the withdrawal of their investments from fossil fuels, and BlackRock, the world’s largest investment management company, announced that environmental sustainability would be a key and decisive factor in future investment decisions.

Moreover, the New York State Pension Fund decided to phase out oil and gas companies by 2024 and completely decarbonize its portfolio, estimated to be worth more than $500 billion, by 2040.

Increasing Taxes, Selling Assets

Mazen Al-Sudairy, head of research at Al-Rajhi Capital, said that the most important problems facing companies investing in fossil fuels include the increase in the cost of taxes in exchange for subsidizing renewable energy, and some countries, especially in Europe, adopting strict policies to get companies to invest in renewable energy.

Al-Sudairy noted that the decision by EU leaders to impose a “carbon tax” to reduce the use of fossil fuels had an evident impact on oil companies, especially considering current crises.

These policies prompted some companies to sell part of their assets, such as Shell and the Italian Eni, Al-Sudairy told Asharq Al-Awsat.

Moreover, BP is currently selling its stake in the Russian company, Rosneft, which constitutes 15% of the company’s production.

The London-based multinational oil and gas company has also exited fossil fuel investments in the US and is expected to pull the plug faster on its fossil fuel investments in the near future.

This puts pressure on the oil industry.

Al-Sudairy added that BP announced its intentions to sell its fossil fuel assets at a value of $25 billion by 2025, which is equivalent to about 13% of the company’s total fixed assets. The research expert said the move would “make matters worse,” especially with the increase in global demand for fossil fuels.

The structural lack of investments and insufficient capital spending will have major impacts on global production of fossil fuels, stressed Al-Sudairy.

He pointed out that in the event of continued reluctance to invest in the sector, the market would lose about 16 million oil barrels by 2030.

There is a need for investments in fossil fuels to exceed 450 billion dollars annually, emphasized Al-Sudairy.

The world’s largest international oil companies, or IOCs, sold over $198 billion of assets between 2015 and 2020, over four times the amount they invested into clean energy technologies, said a Bloomberg New Energy Finance report.

European IOCs notably diverged from their US peers. Equinor was the only IOC to see clean energy investment outstrip divestment proceeds.

Despite high levels of divestment from ExxonMobil, Chevron, and ConocoPhillips, they collectively invested just $757 million in clean energy, only 1% of the divestment proceeds.

Paris Agreement Battle

The Paris Climate Accords, signed in Paris in 2015, had entered into force in November 2016. The international climate treaty focuses on facing the problem of greenhouse gas emissions and finding solutions to adapt and mitigate their damage to the environment.

It also looks seriously at the obvious effects of climate change and seeks to launch initiatives that contribute to reducing emissions to get rid of dependence on fossil fuels.

One of the architects of this agreement is former US Secretary of State John Kerry, who is now the presidential envoy on climate affairs.

The Paris agreement was followed by calls from international institutions to get rid of investment in fossil fuels to access renewable energy, with the International Energy Agency leading a campaign of warnings against investors for not financing new oil, gas and coal projects.

Saudi Warnings

Prince Abdulaziz renewed his warning of challenges emerging to policymakers due to the rise in prices, describing the campaign against investments in the oil and gas sectors as “short-sighted and will have an impact on global welfare.”

The energy minister stressed that the Kingdom of Saudi Arabia would continue to invest in the oil and gas sectors as well as renewable energy.

He explained that the world is going through a stage of energy transition, “and it is wrong to focus on one aspect such as renewable energy because the world economy requires various sources of energy to develop.”

Prince Abdulaziz said that sustainability, which is the result of the circular economy of carbon, will be dependent on technology capable of ensuring a rise in the demand for fossil fuels while addressing emissions through technology.

It is noteworthy that G20 countries had agreed to adopt the circular economy approach to carbon, which was proposed by Saudi Arabia at the G20 Riyadh Summit in 2020.

For its part, the International Energy Agency said it expected a decline in demand to coincide with an increase in supplies during the coming period, expecting a decrease in oil demand by about 100,000 barrels per day in 2021 and 2022.

“Supplies may rise by 6.4 million barrels per day next year, compared to an increase of 1.5 million barrels in 2021,” said the agency in its December 2021 report.

“Continuing to retreat from the cuts may lead to a surplus of about two million barrels in the second quarter of 2022,” the report added.

On the other hand, a report issued by OPEC in 2020 predicted that global demand for crude oil will grow by 2025 to 103.7 million barrels per day, and by 2030 it will rise to 107.2 million barrels per day, then to 108.9 million barrels per day by 2035.

According to the report, global oil demands will grow to 109.3 million barrels per day by 2040.



Saudi Sukuk, Bonds Gain New Route to Liquidity

An investor walks past the Tadawul logo at the Saudi stock exchange. (Reuters)
An investor walks past the Tadawul logo at the Saudi stock exchange. (Reuters)
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Saudi Sukuk, Bonds Gain New Route to Liquidity

An investor walks past the Tadawul logo at the Saudi stock exchange. (Reuters)
An investor walks past the Tadawul logo at the Saudi stock exchange. (Reuters)

Saudi Arabia is bringing trade execution, clearing and settlement into a connected electronic workflow for its riyal-denominated sukuk and bond market, a step aimed at making secondary trading more efficient.

The change could make existing liquidity easier to find, improve price discovery and cut manual processing. It follows an approach seen in international markets, where electronic trading has developed alongside integrated local post-trade systems.

Tradeweb’s alternative trading system, previously available to international investors in Saudi Arabia, now also offers an electronic route for domestic investors and dealers.

The US-based company said GIB Capital and Saudi Awwal Bank executed the first domestic trade on the system.

Trade details were sent to the Securities Clearing Center Company, known as Muqassa, for post-trade processing and then to the Securities Depository Center Company, known as Edaa, for settlement.

Tradeweb is licensed by Saudi Arabia’s Capital Market Authority to operate the system for sukuk and debt instruments.

Under the new process, a domestic investor can request and compare quotes electronically from eligible dealers. Once a trade is executed, its details go to Muqassa, which sends settlement instructions to Edaa. Participation is limited to professional investors and domestic dealers who meet the relevant registration and account requirements.

Previously, domestic execution and settlement followed separate processes, which could require trade details to be transferred or entered into different systems.

The connected electronic record should reduce repeated data entry and manual intervention, while making trades easier to trace and audit. The trades remain bilateral, and existing local settlement arrangements still apply.

Electronic trading does not create liquidity in itself, Enrico Bruni, Tradeweb’s Managing Director and Co-head of Global Markets, told Asharq Al-Awsat. It does, he said, make existing liquidity easier to find and access.

A standardized, traceable request-for-quote process lets investors compare prices from eligible dealers. Bruni said wider use among clients and dealers could, over time, improve price discovery and deepen the secondary market.

Enrico Bruni, Tradeweb’s Managing Director and Co-head of Global Markets. (Tradeweb)

From international to domestic trading

Tradeweb launched the alternative trading system in Saudi Arabia in October 2025, initially allowing international investors to trade riyal-denominated sukuk and debt instruments electronically. Early trades involved international institutions, including BlackRock, BNP Paribas and Goldman Sachs.

The domestic route gives institutions and dealers in Saudi Arabia an electronic trading channel while keeping post-trade processing and settlement within local infrastructure. A transaction can now start with an electronic request for quotes and proceed through local clearing and settlement.

The platform is still at an early stage. Bruni did not provide specific trading-volume figures since its launch, saying activity first focused on access for international investors before trading between domestic participants was added.

A growing need for price discovery

The process arrives as Saudi Arabia’s riyal debt market expands and international participation increases.

Saudi government debt instruments are expected to enter J.P. Morgan’s emerging-market government bond index in stages from January 2027, widening the pool of investors who track the index or invest in its securities.

That broader international investor base, alongside growing domestic participation, could increase demand for efficient access to dealer liquidity and clearer price discovery as the secondary market develops.

Scope for expansion

Bruni said electronic trading could eventually extend beyond government sukuk and riyal-denominated debt instruments to corporate bonds, repurchase agreements and derivatives. Any addition would depend on client demand, available liquidity and regulatory approval.

Tradeweb said the current infrastructure could support other products and trading methods while preserving Saudi market account structures, settlement arrangements and trading practices.

Over the next two to three years, Bruni said, success would be measured less by a particular trading volume than by regular use among more domestic and international investors, a larger network of liquidity providers and a wider range of traded instruments.

For now, the change is chiefly operational: it connects execution with local clearing and settlement and makes dealer liquidity easier to access.

As participation grows, that could help develop secondary trading in riyal-denominated sukuk and bonds.


ECB Says Will Have to Act Again if 2nd-round Inflation Effects Appear

European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE
European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE
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ECB Says Will Have to Act Again if 2nd-round Inflation Effects Appear

European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE
European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE

European Central Bank will have to raise interest rates again if high energy prices feed through to other areas but so far there is no sign of such second-round inflation effects, ECB policymaker ⁠Gabriel Makhlouf said on ⁠Wednesday.

"Although inflation is above our target, we're not seeing the sorts of second round effects ⁠that start feeding through to prices," Makhlouf, Ireland's central bank chief, told national broadcaster RTE in an interview.

"If that happens (energy prices remain high and feed into other areas), we will have to take ⁠action ⁠again to meet our target."

Makhlouf cautioned earlier this month following the ECB's second interest rate hike this year that raising interest rates "a great deal more" risked damaging economic growth.

Also Wednesday, the ECB said the European Union could close a third of its productivity gap with the United States if it had as many large companies, adding its voice to calls for reforms that make it easier for businesses to scale up.

European policymakers are trying to tackle the EU's economic underperformance relative to the United States, which is home to many of the world's largest companies and is leading the race to develop artificial intelligence.

EU workers produce ⁠20% less output ⁠per hour than their US counterparts, according to academic studies. They were almost on an even keel in 1995.

ECB staff found that if Europe had the same distribution of large and small firms as the United States – without changing how productive each ⁠type of company is – the productivity gap would shrink by roughly one-third.

Large firms are significantly more productive than smaller ones. Companies with at least 250 employees generate an average of €86,800 in value added per worker annually, while firms with fewer than 10 employees produce less than half that amount.

The ECB said Europe's weaker productivity performance also reflects lower innovation, fragmented regulation and less developed capital markets, all of which ⁠make it ⁠harder for companies to grow and compete internationally.

The central bank backed the proposed "EU Inc" framework, an EU-wide corporate law regime aimed at reducing barriers to cross-border business activity.

Modelled loosely on Delaware's corporate framework in the United States, EU Inc would create a single legal structure operating across the bloc, bypassing a patchwork of 27 national company law systems and dozens of corporate forms.

"EU Inc. has the potential to support the Single Market, by strengthening competition, innovation and productivity growth," the ECB said.


Surveys: Europe's Economy Surprisingly Resilient amid War-Driven Energy Shock

A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET
A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET
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Surveys: Europe's Economy Surprisingly Resilient amid War-Driven Energy Shock

A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET
A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET

Europe's economy is showing unexpected signs of health even as conflicts in the Middle East and Ukraine drive up energy costs for firms and households, key business surveys showed on Wednesday.

Business activity across the euro zone accelerated in September at its fastest rate in over three years, S&P Global said, with solid growth registered across both the manufacturing and service sectors.

The S&P Global Flash Euro Zone Composite PMI Output Index — where readings above 50.0 signal an expansion in activity — jumped to 53.1 in September from August's 52.0, defying expectations in a Reuters poll ⁠for a dip ⁠to 51.7. The highest forecast in the poll was for 52.6.

"All in all, today’s PMI readings are almost too good to be true," said Carsten Brzeski at ING.

"A euro zone economy that remains completely unharmed by an energy price shock and supply chain disruptions is a welcome surprise. Let’s hope it doesn’t turn out to be a mirage."

S&P said the latest rise in output was broad based across geographies covered by its data.

Business activity in Germany, Europe's largest ⁠economy, expanded solidly in September despite firms facing increased inflationary pressures while in France it grew at its fastest pace in just over two years, driven by a rebound in services demand.

But in Britain, outside the European Union, growth cooled this month as inflation pressure built, its PMI showed, an awkward backdrop for finance minister John Healey ahead of his first budget next month.

Overall new orders in the currency union surged at their fastest pace in over four years supported by a further rise in exports — which include intra-euro zone trade.

The bloc's services PMI bounced to its highest in nearly a year and was well ahead of estimates for a fall, while the manufacturing index held steady.

A gauge of output - ⁠which feeds into ⁠the composite PMI - nudged higher.

To meet the rise in demand firms took on more staff but faced a jump in input costs due to elevated energy prices stemming from the US war with Iran. They were able to pass some of this on to customers.

"September’s big improvement in the euro zone’s composite PMI supports our view that despite the weakness in the official activity data in July, GDP will increase in Q3," said Jack Allen-Reynolds at Capital Economics. "The output price PMIs rose too, but there is still no sign of 'second-round' effects on wages."

Earlier this month the European Central Bank raised interest rates for the second time this year to quell an energy-driven inflation rise and warned price pressures could prove lasting.

Markets are pricing three more ECB rate hikes by the end of June 2027.

"Today's PMI readings make it more difficult for even the ECB's most dovish policymakers to rule out another rate hike," said ING's Brzeski.