Global oil production is set to outpace demand from December as the US and Opec+ countries increase supply, the International Energy Agency said on Tuesday.
"Much-needed relief for tight markets is on the way, with world oil supply set to overtake demand starting this month," the Paris-based agency said in its monthly report.
"The steady rise in supply, combined with easing demand, has considerably loosened our balances."
The Opec+ group, led by Saudi Arabia and Russia, has been gradually increasing supply by 400,000 barrels per day since August to meet rising demand as global economies reopen.
The US, Canada and Brazil are also set to pump at their highest annual levels, lifting overall non-Opec+ output by 1.8 million bpd in 2022, said the agency.
Global supply would soar to 6.4 million bpd next year, compared with a 1.5 million bpd rise in 2021, if Opec+ member countries fully unwind their remaining production cuts, it said.
In the near term, additional barrels could come from strategic petroleum reserves (SPRs) – an emergency stockpile kept by a country to preserve access to oil in case of natural disasters, national security issues and other events.
The US announced on November 23 that it would release up to 50 million barrels of oil from its SPR, with similar action taken by China, India, South Korea, Japan and the UK in an effort to ease energy prices.
Oil prices dropped sharply in November as the emergence of the Omicron coronavirus variant threatened a fledgling economic recovery. However, prices rose subsequently and remained steady as concerns about the new strain eased.
In the US, most cases of the Omicron variant, which was first detected in South Africa last month, have been mild, the US Centres for Disease Control said on Friday.
Booster shots are also effective against the new variant and could offer up to 75 per cent protection, according to another study by the UK Health Security Agency.
Brent, the international benchmark, was down 0.01 per cent at $74.38 a barrel at 3.21pm UAE time while West Texas Intermediate, the gauge that tracks US crude, was trading 0.03 per cent lower at $71.27 a barrel.
“The surge in new Covid-19 cases is expected to temporarily slow, but not upend, the recovery in oil demand that is under way,” it said.
New containment measures put in place to halt the spread of the virus are expected to have a more “muted impact on the economy” due to widespread vaccination campaigns, the agency said. Demand for road transport fuels and petrochemical feedstocks will continue to post healthy growth.
However, the agency has revised down its global oil demand forecast for 2021 and 2022 by 100,000 bpd on average, mainly due to reduced jet fuel use owing to renewed restrictions on international travel.
Total production of crude oil, natural gas liquids and refinery feedstocks in Organisation for Economic Co-operation and Development countries rose 4.6 per cent annually in September, the agency said in a separate report.
On Monday, Opec raised its global oil demand forecast for the first quarter of 2022 but left its full-year growth projection as it said the Omicron coronavirus variant would have a mild impact. The group of crude exporters kept the world oil demand growth unchanged at 4.2 million bpd for 2022.
However, it raised its global oil demand forecast for the first quarter of next year by 1.11 million bpd to 9.13 million bpd as global economies continue to recover from the pandemic.
Killing of Qassem Suleimani
The drill
Recharge as needed, says Mat Dryden: “We try to make it a rule that every two to three months, even if it’s for four days, we get away, get some time together, recharge, refresh.” The couple take an hour a day to check into their businesses and that’s it.
Stick to the schedule, says Mike Addo: “We have an entire wall known as ‘The Lab,’ covered with colour-coded Post-it notes dedicated to our joint weekly planner, content board, marketing strategy, trends, ideas and upcoming meetings.”
Be a team, suggests Addo: “When training together, you have to trust in each other’s abilities. Otherwise working out together very quickly becomes one person training the other.”
Pull your weight, says Thuymi Do: “To do what we do, there definitely can be no lazy member of the team.”
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
