Riyadh ring-fences oil sales to Canada

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DUBAI, Aug 9, (Agencies): Saudi Arabia’s diplomatic dispute with Canada over its arrest of women’s rights activists will not affect the ultraconservative kingdom’s oil sales to Canadian customers, the Saudi energy minister said Thursday. The remarks by Khalid al-Falih show the limits of the ongoing quarrel and may calm some of the bluster surrounding the dispute that suddenly erupted Monday over Canadian diplomats’ tweets asking the kingdom to release the detained activists.

A statement carried by the state-run Saudi Press Agency quoted al-Falih as saying oil sales are not affected by politics as there is a “firm and longstanding policy that is not influenced by political circumstances.” “The current diplomatic crisis between Saudi Arabia and Canada will not, in any way, impact Saudi Aramco’s relations with its customers in Canada,” the statement said, referring the state-run oil giant Saudi Arabian Oil Co. Canada, itself one of the world’s five top energy producers, gets some 10 percent of its oil imports from Saudi Arabia.

Bilateral trade between the two nations is $3 billion a year. Saudi Arabia expelled the Canadian ambassador on Monday and froze “all new business” with Ottawa over its criticism of the kingdom’s arrest of women’s rights activists.

Among the arrested activists is Samar Badawi, whose writer brother Raif Badawi was arrested in Saudi Arabia in 2012 and later sentenced to 1,000 lashes and 10 years in prison for insulting Islam while blogging. Canadian Prime Minister Justin Trudeau appeared to extend an olive branch saying he would keep pressing Saudi Arabia on civil liberties but also saying the Gulf Arab state had made some progress on human rights.

The Saudi Ambassador to Canada said in an interview with al Arabiya television on Thursday that Trudeau’s comments were positive, but more needed to be done.

“There is no doubt that the Prime Minister’s talk can be described as positive but we are still waiting for more to bridge the gap between the two friendly countries,” Naif bin Bandar al-Sudairi said. The dispute has threatened to undermine Riyadh’s foreign investment drive, a campaign already unsettled by a series of assertive political and diplomatic initiatives by the top oil exporter.

The Financial Times said on Wednesday the Saudi central bank and state pension funds had told their overseas asset managers to sell their Canadian equities, bonds and cash holdings. A banking source said the Saudi central bank had asked for their bank’s exposure to Canadian assets, but there were no instructions to sell them. Canadian lender CIBC estimates Canadian dollar-denominated FX reserves held by Saudi Arabia at roughly C$10 billion to C$25 billion, or less than a tenth of daily volume in the currency.

Riyadh’s Center for International Communication (CIC) posted a tweet late on Wednesday saying “neither the government nor the Central Bank or the state pension fund has issued any instructions regarding the sale of Canadian assets”. But it promptly deleted the post without providing an explanation. CIC did not respond to a request for comment. “From a mutual funds perspective, I don’t think there’s any significant investment in Canada from Saudi Arabia,” said a banker based in Riyadh.

“The footprint is light and very small compared to in the United States.” Eurasia Group said easing the crisis needed time. It added in a note: “The new Saudi leadership is leveraging economic and political tools to send a message to its partners that intervention in its domestic affairs will not be tolerated.” Foreign Minister Adel al-Jubeir on Wednesday ruled out any mediation efforts and said the Kingdom was considering taking more measures against Canada for interfering in Saudi Arabia’s domestic affairs. He did not elaborate.

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