06/05/2025

BIZ & FINANCE TUESDAY | MAY 6, 2025

17

Oil tumbles as Opec+ accelerates output hikes

Maldives secures US$8.8b Qatar investment COLOMBO: Cash-strapped Maldives has signed a deal with a Dubai-based company to establish an US$8.8 billion (RM37 billion) investment zone aimed at diversifying the tourism hotspot into a “financial freezone”, the government said yesterday. Three residential and office towers, a convention centre and hotels will form part of the Maldives International Financial Centre (MIFC), President Mohamed Muizzu’s office said in a statement. “It will position Male as the premier global business and financial hub in the Indian Ocean,” the statement said, adding it would allow the Indian Ocean archipelago to “diversify beyond tourism”. The US$6.5 billion economy of the Maldives has been facing foreign exchange shortages since the Covid-19 pandemic and has been warned of a potential foreign debt crisis. The announcement followed an agreement signed on Sunday with MBS Global Investments, a company owned by wealthy Qatari Sheikh Nayef bin Eid Al Thani. The MIFC zone will have no residency requirements and offer “no corporate tax, tax-free inheritance ... and privacy”, the statement added. It is set for completion by 2030 with its projected revenue “to be well over US$1 billion by the fifth year”, according to the government. In February, the IMF said the Maldives required “urgent and stronger” fiscal consolidation to stabilise its troubled economy, despite a thriving tourism industry. The upmarket holiday destination expects its economy to grow by 5% in 2025, but the IMF warned that the sunny outlook masked significant risks. The tiny nation declined an International Monetary Fund bailout loan late last year, with the government instead announcing severe spending cuts. In September, the Maldives described its financial difficulties as “temporary” and said it had no plans to seek a bailout, despite warnings of a possible sovereign default. The Maldives is on the frontline of the battle against global warming, which could raise sea levels and swamp the nation of 1,192 tiny coral islands scattered across the equator. Official data showed the Maldives’ foreign debt stood at US$3.37 billion in the first quarter of 2024, equivalent to 45% of GDP. China accounted for about 20% of the external debt, while India held just under 18%. – AFP Swiss inflation falls to 0% in April ZURICH: Swiss inflation fell to an unexpectedly low 0% in April, government data showed yesterday, increasing the chances the Swiss National Bank will cut rates again next month. Consumer prices rose did not rise last month compared with a year earlier, below the 0.3% increase in February and March, and at the bottom end of the SNB’s 0-2% target range. The figure was below the Reuters poll for a reading of 0.2%. The data raises the likelihood the Swiss National Bank will cut its policy rate from the current 0.25% at its next meeting on June 19 to prevent inflation falling below its 0-2% target range. Markets had priced in an 93% probability the SNB will cut to 0% before the data. There was also a 95% probability that rates will go below 0% later in the year. – Reuters

Barclays reduced its Brent forecast by US$4 to US$66 a barrel for 2025 and by US$2 to US$60 for 2026, while ING expects Brent to average US$65 this year, down from US$70 previously. “We now expect Opec+ to phase out the additional voluntary adjustments by October 2025 but also expect slightly slower US oil output growth,” Barclays analyst Amarpreet Singh said in a note. The net impact of the higher Opec+ output and lower US output has increased Barclays’ estimate of supply in 2025 by 290,000 bpd for 2025 and 110,000 bpd for 2026, he said. ING analysts led by Warren Patterson said the global oil balance is expected to move deeper into surplus throughout 2025. “The oil market has been dealing with significant demand uncertainty amid tariff risks. This change in Opec+ policy adds to uncertainty on the supply side,” they added. Meanwhile, tensions flared in the Middle East after Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Iran for the Tehran-backed Houthi group firing a missile that landed near Israel’s main airport. Iran’s Defence Minister Aziz Nasirzadeh said on Sunday that Tehran would strike back if the United States or Israel attacked. – Reuters

“The May 3 Opec+ decision to raise production quotas another 411,000 bpd for June adds to the market expectation that the global supply/demand balance is moving to a surplus,” Tim Evans, founder of Evans on Energy said in a note. The group could fully unwind its voluntary cuts by the end of October if members do not improve compliance with their production quotas, Opec+ sources told Reuters. Sources have said Saudi Arabia is pushing Opec+ to accelerate the unwinding of earlier output cuts to punish fellow members Iraq and Kazakhstan for poor compliance with their production quotas. The premium between the front-month Brent contract and that for delivery in six months was 4 cents a barrel, narrowing from 47 cents in the previous session. However, the spread flipped to a discount, known as a contango structure, of 11 cents a barrel earlier yesterday, for the first time since December 2023, reflecting expectations that the later-dated market is amply supplied or demand may drop. Barclays and ING have also lowered their Brent crude forecasts following the Opec+ decision.

o Barclays and ING cut 2025 Brent forecasts as surplus looms

SINGAPORE: Oil prices fell more than US$1 a barrel yesterday as Opec+ is set to further speed up oil output hikes, spurring concerns about more supply coming into a market clouded by an uncertain demand outlook. Brent crude futures dropped $1.34, or 2.19%, to US$59.95 a barrel by 0717 GMT (3.17pm in Malaysia) while US West Texas Intermediate crude was at US$56.87 a barrel, down US$1.42, or 2.44%. Both contracts touched their lowest since April 9 at yesterday’s open after Opec+ agreed to accelerate oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day (bpd). The June increase from the eight producers in the Opec+ group will take the total combined hikes for April, May and June to 960,000 bpd, representing a 44% unwinding of the 2.2 million bpd of various cuts agreed on since 2022, according to Reuters calculations.

Storage tanks at the Airankol oil field in Kazakhstan. – REUTERSPIC

Dubai Holding kicks off residential REIT IPO DUBAI: Dubai Holding, an investment conglomerate owned by the emirate’s ruler, said yesterday it plans to list a 12.5% stake in a residential leasing-focused real estate investment trust (REIT) in the first initial public offering of the year in Dubai. residency reforms and a surge in demand for luxury housing from wealthy expatriates. The region’s business and tourism hub has also consolidated major state-owned real estate developers and listed more government entities on the stock exchange, as part of a broader push to deepen capital markets and diversify its economy.

flotation since Talabat in December, and the second in the United Arab Emirates (UAE) this year, after Alpha Data. The subscription period for the IPO is expected to run from May 13 to 20, with trading on the Dubai Financial Market (DFM) to start on or around May 28. DHAM Investments, which is the selling unitholder, and a subsidiary of Dubai Holding, will receive all the proceeds from the offering, according to the statement. Citi, Emirates NBD and Morgan Stanley are joint global coordinators and joint bookrunners for the IPO. – Reuters

The company plans to offer 1.63 billion units in Dubai Residential REIT, which manages 35,700 residential units across different segments, including some of its most iconic communities like City Walk and Bluewaters. Dubai’s property market has rebounded sharply since the Covid-19 pandemic, fuelled by an influx of foreign investors, government

Dubai Residential REIT is expected to be the Gulf Cooperation Council (GCC) region’s largest listed REIT, with a gross asset value (GAV) of 21.63 billion dirhams (RM25 billion), Dubai Holding said in a statement. The listing would also be Dubai’s first IPO