Brexit: Saudi revises investment policy for pound dominated oil assets
Published: 27 Jun 2016 By Grace Kimberley
Despite the fact the UK is (for the time being) still very much a part of the European Union, even after the vote was cast last Friday, fear alone has already taken hold of a number of global business plans and decisions. Saudi Arabia, the world’s largest provider of crude oil, has reconsidered its investment policy in regards to the pound and euro related assets, according to its central bank.
Although it was not exactly clear which assets will be affected, the Saudi central bank has claimed that this is a needed precaution following the turbulence associated with the British EU Referendum. Energy stocks have sharply decreased following the Brexit vote and the value of the British pound has fallen to a 30 year low in comparison to the dollar.
UK-listed oil companies such as BP and Shell are actually seeing benefits from the low value of the British pound and should see a boost in reported revenues as a result of this. However, the consumers that will be purchasing British energy will see the disadvantages of the exchange rate movement, such as high oil prices. The value of the Sterling has drastically dropped following the sudden fears generated by the Brexit outcome, as currency usually does following major economic changes and a state of concern about a country’s economic state.
There is no doubt that the UK’s oil and gas industry will be affected substantially by the Referendum outcome, revealed on Friday morning, but it’s thought by some that the current low oil prices will play a much larger part in the UK’s energy industry in the years to come than the outcome of the Referendum. Some experts are expecting construction investors, however, to now reappraise their industrial and commercial property development plans in light of the vote, which could have an incredibly negative impact on construction job opportunities in the UK. There is a huge cloud of uncertainty hanging over the world following the UK’s decision to leave the EU, but these immediate affects are to be expected after a country has been left to apprehend the future, regardless of whether the eventual result will be beneficial or detrimental to the UK’s economy.
According to Russia’s energy minister, Alexander Novak, oil prices could see a further plunge if this state of concern continues. However, it’s believed that the changes in the energy market directly following the vote will not be sustainable and definitely not a reflection of the UK’s energy future.
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