Foreign Reports Inc. was founded in 1956 by Harry Kern, formerly the Foreign Editor of Newsweek‘s international edition. In that capacity he traveled the globe and came to know many world leaders personally, especially in the Far and Middle East.
Foreign Reports grew out of these unique circumstances, as Kern recognized that multinational companies needed a deeper level of international reporting that surpassed what was then available.
From Newsweek, he brought with him two bureau chiefs from Beirut and Tokyo, who set up their own “bureaus” for the new firm. Among its initial subscribers were the world’s major oil companies, plus other industrial and banking interests.
Oil Crises
In the year of its founding, Foreign Reports covered one of the first Middle Eastern “oil crises”–the 1956 Suez Crisis, which closed the Suez Canal and halted oil tanker traffic. Since that time, Foreign Reports has closely covered all the major and minor crises that have bedeviled world markets. To this day Foreign Reports works diligently to anticipate major developments while avoiding undue alarmism.
Most every crisis begins with a series of rumbles, and those rumbles must be distinguished from other tremors that may not matter. Knowing who the players are, how they think, what they confide in others, and their personal histories–as well as their own domestic conditions–is essential. As any potential crisis builds, often over a period of months, Foreign Reports provides contemporaneous narrative, tracking important stories and their trajectory.
Foreign Reports and the Middle East
The Middle East, with its vast petroleum reserves, was an obvious early focus of Foreign Reports, especially as the firm’s subscribers maintained substantial equities in oil concessions across the region. As President of the firm, Harry Kern frequently visited many of twentieth century’s key players, including the Shah of Iran, Gamal Abdul Nasser of revolutionary Egypt, and Crown Prince Faisal of Saudi Arabia, to name but a few. Kern also maintained close relationships with the leading foreign policy actors in the Eisenhower Administration, most notably the Dulles brothers.
Nathaniel Kern–or Nat–joined his father at Foreign Reports after graduating from Princeton University in 1972 and attending the University of Riyadh from 1970-71, making him the country’s first non-Arab student. His joining coincided with hints of the first full-scale “energy crisis,” which would transform the world and Saudi Arabia’s status in it, following the 1973-1974 oil embargo.
Within two years, world oil markets and the Middle East had changed dramatically. Prices skyrocketed and Saudi production grew steadily. It was then that Foreign Reports branched out from political reporting and began also providing business development assistance to firms interested in new markets, primarily–though not exclusively–in Saudi Arabia. Foreign Reports helped develop competitive bids in the power and desalination markets, among others.
Changing Realities of the Oil Market
By the early 1980s, major international oil companies were losing their equity ownership of Middle East oil production and many needed to recalibrate their ties with regional governments. New players also emerged as the futures market matured. World oil prices were practically a secret in the early days of Foreign Reports and were remarkably stable during the firm’s first 16 years. But price volatility ultimately led the firm to develop new services.
OPEC did not institute its first quotas until 1982, just as crude oil prices were beginning to weaken. When prices eventually crashed in late 1985, no other reporting service in the industry had so closely chronicled just how the crash came to pass and what its effects would be. Leading up to 1985, Foreign Reports carefully documented the actions of then Saudi Petroleum Minister Ahmed Zaki Yamani, who was considering new ways to price Saudi crude as he cruised the Mediterranean on his yacht in August of that year. Foreign Reports was the first to report that Yamani, just before Labor Day, had signed “net-back pricing deals” with his main international customers. The deals would cut all previous supports for crude oil prices, which fell from the high $20s to the single digits within nine months. (NYMEX futures prices did not start to decline until the day after Thanksgiving.)
Cutting Through the Noise
As the pace and sophistication of oil trading has accelerated greatly since those days, and as the volume of information exploded thanks to the internet, our services have evolved. Yet we still rely on time-tested principles and methods to cut through the noise, providing timely insight when it’s needed most.