Tags: killing | saudi | khashoggi | price | oil

The Killing of Saudi Journalist Khashoggi and the Price of Oil

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Tuesday, 23 October 2018 08:48 AM Current | Bio | Archive

Turkish President Erdogan said the killing of journalist Jamal Khashoggi at the Saudi Arabia’s consulate in Istanbul was the result of a thoroughly planned plot, rejecting Riyadh’s explanations of the murder and calling on Saudi’s king to hold all culprits to account.

Erdogan said: “We have strong evidence in our hands that shows the murder wasn’t accidental but was instead the outcome of a planned operation. Since this is a political murder, if there are other collaborators in this crime, they should also be included in the investigation.”

Erdogan’s comments bring to an end two days of suspense since he promised to reveal all details of the Khashoggi case “in all its nakedness.” The president refrained from implicating King Salman, saying he had no doubts about his sincerity and referring to him as the protector of Islam’s most holy sites, a sign of respect.

Erdogan made also no reference to the kingdom’s influential crown prince Mohammed bin Salman, also known as MBS.

The Saudi Energy Minister Khalid al-Falih said that Saudi Arabia had no intention of unleashing a 1973-style oil embargo on Western consumers and will isolate oil from politics.

Several U.S. lawmakers had suggested imposing sanctions on Saudi Arabia in recent days while the kingdom, the world’s largest oil exporter, had pledged to retaliate against any sanctions with “bigger measures.”

“This incident will pass. But Saudi Arabia is a very responsible country, for decades we used our oil policy as a responsible economic tool and isolated it from politics,” Falih said.

The oil market has not been getting too worked up by Saudi oil supply concerns. This morning, crude oil prices for Brent and WTO have eased by more than 1 percent.

In the meantime, Saudi Arabia's investment conference “The Future Investment Initiative (FII)” has gone ahead, with some 40 participants being understood to have pulled out amid allegations that Saudi Arabia was behind Saudi journalist Jamal Khashoggi's killing.

BBC Middle East journalist Sebastian Usher, who is in Riyadh, says while the big names may have pulled out, hundreds are still attending.

As the Saudi Minister of Energy said: “This incident will pass.”

Italy’s Budget Deficit and the European Commission

The sound of a "fiscal" whip being cracked and the Teutonic rallying cry of "we must have discipline" can be heard echoing around the European Commission in Brussels today.

The Italian budget is up for discussion, in other words. The European Commission is to decide this afternoon (Brussels time) whether the Italians should take back their budget "homework" and do it again, writing out their budget plans neatly, concentrating and paying attention to the instructions written on the "blackboard." Those instructions, being of course: "Don’t be fiscally irresponsible."

Investors could do well taking notice that the European Commission may issue a negative opinion on Italy’s budget today, taking the unprecedented step of essentially rejecting an EU country’s spending plans.

The move might not come as a surprise since Italy hasn’t addressed any of the European Commission’s concerns. Still, it will further escalate the brewing standoff between Rome and Brussels, which is one that could have ‘unforeseen consequences’ for Italy and the Eurozone as a whole.

On the one hand, the Italian budget is by EU standards "fiscally irresponsible." On the other hand, the European Commission cannot do much about it and doesn’t want to give ammunition to the anti-EU cause in Italy.

Investors should also better not overlook the fact that all this being part of Italian badge arithmetic where three hands are entirely possible, and therefore it may be better to rely on market forces to exert some discipline.

While Italy’s deficit is well within the 3 percent limit, the European Commission has demanded smaller gaps for the country to bring down its debt load, which at more than 130 percent of GDP is second only to Greece within Europe.

Crucially, the so-called structural deficit, a key measure for the commission, which strips out effects of the economic cycle and one-time spending items, is also way off the mark. Italy projects this will deteriorate by 0.8 percentage points while the Commission has demanded an improvement of 0.6 percentage points.

For the moment, the euro is a little bit weaker and quotes around $1.15 per euro.

Etienne "Hans" Parisis is a bank economist who has advised investors on financial markets and international investments.
 

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The oil market has not been getting too worked up by Saudi oil supply concerns. This morning, crude oil prices for Brent and WTO have eased by more than 1 percent.
killing, saudi, khashoggi, price, oil
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2018-48-23
Tuesday, 23 October 2018 08:48 AM
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