Tag: bahrain

Russian Sources Signal Possible End to Oil Production Cuts

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With oil prices nearing their highest since early March, Kirill Dmitriev, one of Russia’s top oil negotiators  signaled his will to draw down production cuts on Friday June 19. Dmitriev is one of the key players leading negotiations with the Organization of Petroleum Exporting Countries (OPEC). Agreements between OPEC and the Russian-led alliance of non-OPEC countries, called OPEC+, have been one of the primary factors in the efforts to stabilize the oil market.

With demand for oil increasing as economies reopen, Russia appears to see no point in further extending production cuts. The existing agreement calls for a global production cut of 7.7 million barrels per day, from August to December. From January 2021, production cuts would drop to 5.8 million barrels per day, lasting until April 2022 when the agreement expires.

Price uptick

In April, oil prices hit their lowest price since the turn of the millennium as high global supply met an unprecedented dip in demand when flights were grounded, citizens faced lockdowns, and non-essential economic activity dissipated. In April prices hit $16 per barrel, with WTI briefly dipping into historic negative territory amid a scramble to offload futures before their expiry.

The extreme fluctuations in the already volatile oil market prompted most of the world’s oil producing countries to come together to establish painful, but necessary, production cuts in order to ease over supply that led to oil storage running out, with tankers and oil bunkers used as temporary storage to accommodate for a lack of buyers.

OPEC+

Ever since, any news around negotiations over production cuts between OPEC and the OPEC+ groups has led to swings in global oil prices. Now that demand is increasing and most OPEC members report compliance with the agreed upon cuts, meetings have revolved more around suring up lagging countries like Iraq and Kazachstan.

The current oil price hovers around $40, sufficient for Russia to balance its budgets. For many higher-cost oil producers however, the current price means losses, involuntary production cuts and even bankruptcies. The US shale gas industry, Canadian tar-sand extraction and Brazilian off-shore oil all struggle to survive at current prices, while countries like Saudi Arabia would be able to live with “lower for longer.”

OPEC

But while many OPEC members in the Gulf could make a profit on current prices, their national budgets have been based on much higher prices, leaving major gaps. A country like Iraq, that has some of the cheapest oil to extract, still needs oil prices to be at $56 per barrel in order to fund the $135 billion in estimated state revenue. The country has struggled to comply with OPEC’s agreed cuts as most of its oil production is done by foreign supermajors, leading to difficult negotiations.

Many countries of the Gulf Cooperation Council (GCC) similarly presented ambitious budgets for 2020, expecting much higher revenues than those that materialized due to the COVID-19 crisis. For these countries production cuts remain one of the few tools to drive prices up further, but it appears that major players like Russia and Saudi Arabia would prefer oil prices to not increase too rapidly, in order to prevent a resurgence in its higher-cost competitors like shale gas.

Diverging forecasts

Saudi Arabia and Russia are expected to have a much larger market-share in the near future. After a decade of losing market-share to US producers, Saudi Arabia is expected to have the largest market-share since the 1980s. With production down significantly and demand slowly returning, prices are likely to go up in the long run.

Investment bank JP Morgan Chase in early March predicted oil to hit $190 per barrel due to a “supercycle” where a downward swing in prices is followed by equally dramatic upswing. The bank’s predictions were squashed by the COVID-19 related drop in demand, but its experts remain confident that a “bullish supercycle is on the horizon,” according to CNN.

“The reality is the chances of oil going toward $100 at this point are higher than three months ago,” JP morgan’s Christyan Malek. However, uncertainty remains as economic results are highly dependent on public health successes in containing the spread of the coronavirus. BP has slashed its forecast, expecting COVID-19 to have an “enduring impact on the global economy.”

Bahrain Kuwait COVID-19 Apps Deemed Invasive

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On June 16, Amnesty International released a report by its Security Lab after testing eleven contact-tracing apps intended to assist governments in finding COVID-19 infections. Three countries stood out as having produced “alarming mass surveillance tools”: Bahrain, Kuwait, and Norway all used methods that the NGO considers “dangerous for human rights.”

“Bahrain, Kuwait and Norway have run roughshod over people’s privacy, with highly invasive surveillance tools which go far beyond what is justified in efforts to tackle COVID-19,” the head of Amnesty’s Security Lab stated. “Privacy must not be another casualty as governments rush to roll out apps.”

Norway stops app

Out of the three countries, one has already halted the use of its app. The Norwegian government made the decision hours after Amnesty International published the report. “The Norwegian app was highly invasive and the decision to go back to the drawing board is the right one,” Amnesty stated on their website.

The Norwegian app, Smittestopp, had not yet seen wide implementation but the invasive nature of the app’s design had prompted Norwegian data agency Datatilsynet to issue a warning. The agency said it would no longer allow Norway’s Institute of Public Health to access data generated by the app.

Camilla Stoltenberg, director of Norway’s public health institute, disputed the privacy claims and warned that the contact tracing app was needed in order to halt the local spread of coronavirus. “The pandemic is not over,” Stoltenberg stressed. The director’s concerns did not stop the government from halting the app and removing the data of its 600,000 users.

Privacy issues

The central issue with the Norwegian app is similar to those regarding Bahrain and Kuwait’s apps, as well as those of apps in development for the governments of France and the UK. The apps feature a constant stream of data reported on users and uploaded to a national database, allowing the government to know where its citizens are at all times.

A similar issue arose with Qatar’s contact-tracing app, which similarly captured and shared GPS data. Outside sources could have accessed this data as a security vulnerability had the potential to expose the information to over one million Qataris. Qatari officials say they have since fixed the issue.

The Bahraini and Kuwaiti apps both record GPS data into a centralized database instead of using a method based on Bluetooth, which would only activate when the user is in close proximity with an infected person. But Bluetooth is far from a flawless technology, prompting countries like France and the UK to opt for a similar method to that of Bahrain and Kuwait.

Surveillance

Amnesty International fears that governments could misuse the wealth of data recorded by the apps. Bahrain attempted to provide a positive incentive to stay home by using its app’s data to produce “Are You Home?” The national television show would offer families  prizes for staying home during Ramadan, verified using data from the BeAware Bahrain contact-tracing app.

While the show’s idea to provide positive incentives for COVID-19 adherence is commendable, the use of a public health database for such entertainment is not. Allowing anyone but the most qualified public health experts to access the recorded data highlights the potential for abuse.

Bahrain also published online data that revealed much about the demographics and personal details of people infected by COVID-19.

The Kuwaiti app used similarly centrally recorded data with vulnerabilities for potential abuse. The Kuwaiti app even used proximity reports between phones and Bluetooth bracelets to ensure people carried their phones with them.

After Norway’s quick response to Amnesty International’s analysis, the question remains as to what action Bahrain and Kuwait will take to prevent misuse of their contact-tracing apps.

IIF: Gulf Countries Facing Historic Economic Crisis

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The six nations that comprise the Gulf Cooperation Council (GCC) are facing heavy impacts from the coronavirus pandemic and a drop in oil prices amid a sudden demand slump. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates are in for a difficult period according to the International Institute for Finance (IIF), a global association of financial institutions.

The Institute had already announced that emerging markets are facing an “unparalleled sudden stop,” with capital leaving the economies of developing nations at never-before-seen rates. Capital is flowing from emerging markets to developed ones at over five times the rate at the worst point of the 2008 global financial crisis.

Triple threat

For the six GCC countries, local economies are suffering from a trifecta of bad news. Capital flows are moving to developed nations and oil revenues have cratered while tourism, hospitality, retail, and travel sectors are all facing unprecedented difficulties due to stringent COVID-19 measures.

Despite the overall relatively successful containment of the coronavirus, GCC countries are set to see a contraction in real gross domestic product (GDP) of 4.4% according to IIF predictions. The World Bank in 2019 had predicted GDP growth between 1% and 4% for most GCC countries, an improvement over the previous year. Oman was considered one of the Council’s members most likely to grow, with an increase estimated at 3.7% due to increased natural gas production.

Oil revenue and state budgets

But the coronavirus and an international “war” over oil prices means the region is now in for a contraction in GDP. The IIF is cheering on unpopular austerity measures as a means to stop deficits from growing as cuts in public spending “could more than offset losses stemming from reduced oil exports.” Even with unpopular and painful spending cuts, the Gulf Council’s aggregate deficits are expected to increase to 10.3% of GDP.

Oman, which the World Bank touted as the GCC country most likely to grow significantly in 2020, is now considered “an increasingly vulnerable spot in the region in light of its mounting debt.” The country could face an economic contraction of 5.3% while its deficit is likely to widen to 16.1%, according to the IIF.

Opportunity to reform?

The crisis also poses an opportunity to build up resilience according to Alain Bejjani, CEO of Emirati retail operator Majid al Futtaim. “In the coming two to three years, we’re going to see, certainly, a very, very large impact that’s going to be asymmetric, depending on the readiness of countries,” Bejjani told CNBC on May 5.

“I think this is a golden opportunity to really change, to reform and to transform our economies into more resilient economies that have (the) ability to bounce back faster,” Bejjani stated. The current crisis could easily accelate reforms and diversification that have resulted in broader opportunities and even improved conditions for women in GCC countries.

Bahrain Arrests COVID-19 Conspiracy Theorist as Cases Continue to Grow

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Bahrain continues to struggle with its local COVID-19 epidemic. The small island nation that is home to 1.6 million people is still seeing its caseload grow as officials have now confirmed 11,398 total cases. The country is outperforming its neighbors Qatar (56,910 cases) and Saudi Arabia (85,261 cases) but appears to struggle to limit new infections.

The Bahrain Health Ministry has performed over 300,000 tests and has limited travel, screened entry points, and banned social gatherings. However, Bahrain’s non-native population continues to be a source of new infections as low-income foreign workers make up the majority of new cases. With 4,914 active cases remaining, the kingdom is ensuring all citizens take the crisis seriously.

Coronavirus hoaxer

A tip from the General Administration for Combating Corruption and Economic and Electronic Security led prosecutors to a citizen accused of spreading false information about the virus online. The resident had used social media to claim the virus was a global hoax intended to deprive people of money.

Bahrain’s Chief Prosecutor Nawaf Al Awadi told Gulf News that the suspect had belittled Bahraini containment measures and, in effect, discouraged citizens from adhering to the protocols. Bahrain is treating the case as an effort to undermine national efforts to limit the spread of COVID-19.

Al Awadi reported that the conspiracy theorist had claimed that “COVID-19 does not exist in reality and is just a lie for ripping off people’s money.” Bahraini officials are taking failures to comply with measures or the undermining of such efforts very seriously.

Breaches of Bahraini public health law are punishable with a sentence of up to three months and a possible fine that can range between $2,645 and $26,500.

Cases climb

Citizens of Bahrain had hoped for good news following the easing of restrictions that coincided with the Islamic holy month of Ramadan and the following Eid al Fitr celebrations, but local health professionals continue to report new cases.

Three-hundred new cases emerged on Friday, May 29, Saturday ushered in 29 new infections, and Sunday saw the country’s 19th COVID-19-related death.

The country’s Achilles heel appears to be its foreign workers who often face poor living conditions. The mainly Asian low-income workers are often housed in crowded labor camps where the virus can freely spread. In order to limit infections of foreign workers, the government has moved 8,011 away from these crowded facilities to be housed by the companies that employ them.

“Many employers were quick to implement precautionary measures necessary to combat this pandemic by providing additional accommodation to reduce congestion and through those efforts 8,011 laborers were relocated,” Labor and Social Development Minister Jameel Humaidan told Gulf Daily News.

A new normal

Meanwhile, the Bahraini public and private sector are preparing for a “new normal” as they move much of their services online. Gulf Daily News has reported that costs of services and products in the country will likely increase by as much as 35%, partly because physical businesses can only serve a limited amount of customers at once.

In response, the Al Salam Bank of Bahrain has announced it will be launching a virtual branch to provide banking services amid COVID-19 restrictions. The Labor Ministry of Bahrain has similarly moved much of its facilities for job seekers online.

The ministry told Gulf News that it will use the digital system to comply with new public health measures as well as to provide more fair and transparent employment opportunities to citizens. The ministry has set up a hotline for older workers who could potentially struggle with the shift to digital.

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