Dr Robert Mabro, the former director of the Oxford Institute for Energy Studies and a prominent adviser to OPEC nations, says the current oil price is too high.
Dr Robert Mabro, the former director of the Oxford Institute for Energy Studies and a prominent adviser to OPEC nations, says the current oil price is too high.

Crude 'at least $20 too high'



Surging oil prices have become "divorced" from supply and demand and are now at least US$20 more than they should be, one of the world's top oil experts warned at the Dubai Economic Forum. With oil futures markets that set benchmark prices now serving a dual function as a site to hedge price risk and "a betting casino" for mainstream investors, the oil price had lost its link to market conditions, said Dr Robert Mabro, the former director of the Oxford Institute for Energy Studies and a prominent adviser to OPEC nations.

"The oil price has gone up from $60 to $80 in a short period, and there has been no change in fundamentals and no change in ideas about the future," Dr Mabro said. "That's the danger: we have an oil price that is divorced from fundamentals." Oil prices have breached the $80 barrier in recent weeks, despite the fact that global demand remains depressed and OPEC nations have put on idle millions of barrels of extra capacity that could flood the market with crude at short notice.

US crude traded below $79 a barrel yesterday. A number of experts, including OPEC officials, have warned that oil above $80 could threaten the recovery of the global economy. Energy experts are divided over the cause of this year's oil price rally of 76 per cent. Some economists argue prices are gaining over worries that global oil supply will be inadequate after the economy recovers from the recession.

Others, including Dr Mabro, say the price rise is fuelled by a herd mentality among Wall Street traders who are influenced more by equities, currencies and other financial markets than the supply and demand of crude. "The problem is that the futures market is only partially an oil market: it's a market for financial instruments which include oil, the price of which is influenced by what happens in the real market - but which is also influenced by what is happening on other markets," Dr Mabro said.

One example he cited is the negative relationship between the value of the dollar and oil prices that has been demonstrated in recent years. A common explanation for the correlation is that a fall in the dollar encourages oil producers to seek a higher nominal price in dollars to get the same real value for each barrel. Experts also say a drop in the value of the dollar tends to drive up all dollar-denominated commodities, since it makes them more attractive to investors holding other currencies.

But Dr Mabro said there should be no relationship between the two, as the oil producers who are directly affected by the dollar's decline have no role in setting the price, which is determined by the futures price in New York and London. He said the oil-dollar link was "incomprehensible", but suggested it had simply become a self-fulfilling prophecy among traders. The danger for oil producers is that unpredictable oil prices could cause them to make billions of dollars worth of unneeded investments in new drilling and production capacity, Mohammed al Hamli, the UAE Minister of Energy, told a conference in Moscow on Monday.

"Figures such as these cannot fail to ring alarm bells in the oil industry," Mr al Hamli said, according to a transcript of the speech posted on WAM, the state news agency. "From a global perspective, such uncertainty raises the risk of reducing necessary investments in the oil and gas industry." @Email:cstanton@thenational.ae

If you go

The flights

The closest international airport for those travelling from the UAE is Denver, Colorado. British Airways (www.ba.com) flies from the UAE via London from Dh3,700 return, including taxes. From there, transfers can be arranged to the ranch or it’s a seven-hour drive. Alternatively, take an internal flight to the counties of Cody, Casper, or Billings

The stay

Red Reflet offers a series of packages, with prices varying depending on season. All meals and activities are included, with prices starting from US$2,218 (Dh7,150) per person for a minimum stay of three nights, including taxes. For more information, visit red-reflet-ranch.net.

 

The biog

Name: Dhabia Khalifa AlQubaisi

Age: 23

How she spends spare time: Playing with cats at the clinic and feeding them

Inspiration: My father. He’s a hard working man who has been through a lot to provide us with everything we need

Favourite book: Attitude, emotions and the psychology of cats by Dr Nicholes Dodman

Favourit film: 101 Dalmatians - it remind me of my childhood and began my love of dogs 

Word of advice: By being patient, good things will come and by staying positive you’ll have the will to continue to love what you're doing

Origin
Dan Brown
Doubleday

SERIES INFO

Schedule:
All matches at the Harare Sports Club
1st ODI, Wed Apr 10
2nd ODI, Fri Apr 12
3rd ODI, Sun Apr 14
4th ODI, Sun Apr 16

UAE squad
Mohammed Naveed (captain), Rohan Mustafa, Ashfaq Ahmed, Shaiman Anwar, Mohammed Usman, CP Rizwan, Chirag Suri, Mohammed Boota, Ghulam Shabber, Sultan Ahmed, Imran Haider, Amir Hayat, Zahoor Khan, Qadeer Ahmed

Zimbabwe squad
Peter Moor (captain), Solomon Mire, Brian Chari, Regis Chakabva, Sean Williams, Timycen Maruma, Sikandar Raza, Donald Tiripano, Kyle Jarvis, Tendai Chatara, Chris Mpofu, Craig Ervine, Brandon Mavuta, Ainsley Ndlovu, Tony Munyonga, Elton Chigumbura

The burning issue

The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE. 

Read part four: an affection for classic cars lives on

Read part three: the age of the electric vehicle begins

Read part two: how climate change drove the race for an alternative 

The specs

Engine: 6.2-litre V8

Transmission: ten-speed

Power: 420bhp

Torque: 624Nm

Price: Dh325,125

On sale: Now

Dengue fever symptoms
  • High fever
  • Intense pain behind your eyes
  • Severe headache
  • Muscle and joint pains
  • Nausea
  • Vomiting
  • Swollen glands
  • Rash

If symptoms occur, they usually last for two-seven days

Herc's Adventures

Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5

EMIRATES'S REVISED A350 DEPLOYMENT SCHEDULE

Edinburgh: November 4 (unchanged)

Bahrain: November 15 (from September 15); second daily service from January 1

Kuwait: November 15 (from September 16)

Mumbai: January 1 (from October 27)

Ahmedabad: January 1 (from October 27)

Colombo: January 2 (from January 1)

Muscat: March 1 (from December 1)

Lyon: March 1 (from December 1)

Bologna: March 1 (from December 1)

Source: Emirates

COMPANY PROFILE

Company: Eco Way
Started: December 2023
Founder: Ivan Kroshnyi
Based: Dubai, UAE
Industry: Electric vehicles
Investors: Bootstrapped with undisclosed funding. Looking to raise funds from outside

TWISTERS

Director:+Lee+Isaac+Chung

Starring:+Glen+Powell,+Daisy+Edgar-Jones,+Anthony+Ramos

Rating:+2.5/5

COMPANY PROFILE

Name: Haltia.ai
Started: 2023
Co-founders: Arto Bendiken and Talal Thabet
Based: Dubai, UAE
Industry: AI
Number of employees: 41
Funding: About $1.7 million
Investors: Self, family and friends

COMPANY PROFILE

Company name: OneOrder
Started: March 2022
Founders: Tamer Amer and Karim Maurice
Based: Cairo
Number of staff: 82
Investment stage: Series A