Good morning, wonderful people. We have a packed issue for you this morning, with updates from Saudi Arabia on infrastructure projects, and the World Trade Organization’s latest trade outlook report coming out. Let’s dive in.

THE BIG LOGISTICS STORY- Saudi Arabia has offered up some 14 projects in the logistics and transport sectors to private investors, including highways, roads, and development of ports.

HAPPENING TODAY-

WATCH THIS SPACE #1-Saudi Arabia and Iran have agreed to resume flights following a seven-year hiatus, the Wall Street Journal reports. The development came out of a historic meeting between both countries’ foreign ministers in Beijing last week— the latest sign of warming relations between the longtime regional rivals following the re-establishment of diplomatic relations as a result of a Beijing-brokered detente which took place a few weeks ago. “The flight between Riyadh and Tehran only takes two hours,” Saudi Foreign Minister Prince Faisal told his Iranian counterpart Amir-Abdollahian in front of reporters at the conclusion of their meeting, the WSJ reported.

WATCH THIS SPACE #2- Construction of the 32 km Shalamcheh-Basra Railway is set to begin after Ramadan, theIslamic Republic News Agency (IRNA) reports, citing statements from Iran’s Road and Urban Development Minister Mehrdad Bazrbash. The first phase of the project will involve a mine clearing operation, after which Iraq is said to begin development of the railway, and Iran will begin development of a movable bridge over the Shatt Al-Arab river. The project is set to be completed within 18 months.

This could be one of several projects linking the two countries: Iran and Iraq had also recently discussed potentially developing a new railway linking Khosravi in Iran to Karbala in Iraq.

WATCH THIS SPACE #3- Egypt is mulling plans to include state-owned Export Development Bank (Ebank) as part of its rebooted privatization program, Al Mal reports, citing unnamed sources it says have knowledge of the matter. A study is underway to examine proposals which could see Ebank bring on board new investors through a capital increase, the sources reportedly said. The 84% state-owned bank — which supports Egyptian exports through services such as credit ins. and letters of credit— recently saw its bottom line more than double y-o-y in 2022 to reach EGP 1.34 bn on the back of higher interest rates, according to its most recent financials (pdf).

WATCH THIS SPACE #4- The UAE and Vietnam could soon sign a CEPA: During a visit by a Vietnamese delegation tothe UAE, the countries signed a joint declaration of intent to begin talks on signing a Comprehensive Economic Partnership Agreement (CEPA), Emirates News Agency (WAM) reports.

The details: Both parties discussed collaborating in the agricultural, energy, industry, investment, infrastructure, trade, and logistics sectors as the CEPA negotiations move forward. Foreign Trade Minister Thani Al Zeyoudi also encouraged Vietnam’s private sector to capitalize on the UAE’s NextGenFDI initiative, which aims to facilitate foreign investment in the country, by easing access to finance and business licenses and helping with relocation.

Trade between the two countries has been on the rise: Trade in goods excluding mobile phones and mobile phones accessories grew to more than USD 3.5 bn in 2022, a 9% y-o-y increase, and a 34% growth since 2020, Al Zeyoudi is quoted as saying. “The UAE accounts for 39% of Vietnam’s trade with Arab countries,” Al Zeyoudi adds.

This comes on the heels of the UAE’s most recent CEPA signing withIsrael, one of many CEPAs the UAE has signed in the last couple of years.

DATA POINT #1- Saudi Arabia’s air freight traffic rose 7% y-o-y in 2022, according to a report (pdf) by the kingdom’s General Authority for Statistics. The kingdom’s international air freight traffic grew 12% y-o-y to c.559k tons last year, while domestic air freight traffic dropped 26% y-o-y to c.58k tons in 2022. There was a 20% y-o-y increase in the number of companies involved in air transport in 2022 to 1,443 companies in the areas of cargo handling and transport, passenger transport, and support services.

DATA POINT #2- The kingdom’s aviation sector also scored 94.4% on the International Civil Aviation Organization’s safety scale, ranking seventh among G20 members, according to its safety audit report, Saudi Press Agency reports.

DATA POINT #3-Pre-arrival customs clearance transactions in Abu Dhabi have grown to 33% of total customs clearance transactions in 1Q 2023, Wam reports.The General Administration of Abu Dhabi Customs reported that pre-arrival clearance transactions accounted for 45% of total customs clearance at airports, 31% at land ports, and 9% at seaports. The pre-arrival clearance rate for shipments departing the country accounted for 47% of the total number of registered exit data, while inbound shipments accounted for 21% of the total number of entry data.

For the first time since the start of the war in Yemen, a container ship entered the terminal at the Port of Aden directly upon its arrival, according to a statementfrom Port Aden. The port was seized by Saudi-backed Yemeni forces back in 2015, and has since faced operational obstacles due to the war, including sieges and excessive vessel searches.

The World Bank is now expecting the MENA region to grow at a 3.0% clip during 2023, down 0.5 percentage points from its previous forecast, according to its April MENA Economic Update (pdf). Oil exporters will see the biggest deceleration in growth as last year’s hot energy markets on the back of the war in Ukraine give way to a more uncertain global outlook, though the historical growth gap between oil exporters and importers in MENA is expected to persist.

Sounding the alarm on food insecurity: The April update has a special focus on what the World Bank says is “a full-blown food insecurity crisis brewing across the region,” largely thanks to inflationary pressures. Food insecurity in MENA now affects some 17.6% of the population, it writes, up from 11.8% in 2006. “Inflation hits the poor much harder than the rich, because the poor spend most of their budget on food and energy,” it says.

MARKET WATCH-

OPEC+ production cuts should bump prices in the short-term, but may lead to a deficit in the market in the back half of the year, Fitch Ratings said last week. The surprise decision by the international oil cartel to cut almost 1.2 mn barrels of daily output pushed benchmark crude up to USD 85 per barrel after trading below USD 80 / bbl in the second half of March. The latest reduction to supply, coupled with increasing demand from China after reopening, make it more likely that the international oil market will go into deficit territory by 2H 2023 after exhibiting moderate surplus in 1Q 2023, according to the report.

SPEAKING OF OIL PRICES-Saudi’s Aramco hiked up prices of Asia-bound shipments by USD 0.30 / bbl, marking the third consecutive monthly increase, Bloomberg reported.

Production hikes at Kuwait’s Al Zour refinery are set to turn the table on Western low sulfur fuel oil (LSFO) exports to Asia, S&P Global said in a report. The new refinery went online in late 2022 and has been ramping up production since, reaching 410k bbl per day in early March. That capacity is set to double in the coming months, traders told the news agency, with most of the output set to make its way to the world’s largest bunkering hub in Singapore to supply Asian markets. At full capacity, the refinery is expected to supply c. 40% of Singapore’s demand for LSFO. The new volume is expected to crowd out Western suppliers “rendering the arbitrage economics that have long enabled Western cargoes to arrive in Asia increasingly unviable,” says the report.

SOUND SMART- LSFO is the go-to fuel for international shipping due to regulations mandated by the International Maritime Organization (IMO) that aim to reduce the carbon footprint of the global shipping industry. Western suppliers historically were the main suppliers of Asia’s LSFO, and have been benefiting from arbitrage economies, whereby LSFO stocks are bought at cheaper prices in the West and sold at a markup in Asia, earning them a positive price differential.

THE REALIGNMENT-

Fuels derived from Russian oil are making their way to Europe through India: India’s record-high imports of crude oil from Russia in FY 2022-23 fiscal year have enabled its refiners to export more diesel and jet fuel to Europe, as the continent shuts out Russian products, Reuters reports. India’s access to cheaper Russian crude has increased output at its refineries, allowing them to export refined products to Europe more competitively and gain a larger market share, according to ship-tracking data from Kpler and Vortexa.

South Korea backs US push to diversify global supply chains away from China: South Korea is looking to solidify its cooperation with India in supply chain, science, and technology, aligning with a US-led effort to diversify away from China, Bloomberg reports. This is yet another blow to China, after Japan joined the US and the Netherlands in banning exports of semiconductor equipment to China. India has been a beneficiary of this shift, as companies including tech giant Apple are increasing their manufacturing capacity in the country, according to Bloomberg.

Beijing wants WTO intervention on US chip curbs: China has called on the World Trade Organization (WTO) to scrutinize Washington’s attempts to prevent it importing chip technology, Reuters reports.

CIRCLE YOUR CALENDAR-

African Air Expo, organized by Adone Events, will take place in Cape Town from 12-15 February 2024, according to the event website.The commercial and general aviation and airport equipment exhibition will showcase the aviation industry’s growth, as well as that of related sectors like tourism, cargo, and human capital development. Some 300 exhibitors are expected at the event, which will feature a static display of 90 aircraft and is expected to host 20k visitors.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.