Oil prices slid on Thursday morning amid reports about an imminent US-Iran nuclear deal, which could lead to a return of Iranian barrels to the undersupplied crude market.
Prices were down more than 2 per cent in each benchmark in early trade on Thursday in response to the news, Emirates NBD said in its daily outlook.
Brent, the global benchmark for two thirds of the world's oil, stood at $93.41 a barrel at 10.54am UAE time, down 1.48 per cent.
Prices of West Texas Intermediate, the gauge that tracks US crude, were down 1.49 per cent to trade at $92.26 a barrel.
Brent futures, which had moved up to about $97 a barrel at the end of last week, have retreated to about $94 a barrel at present.
Crude prices have been edging close to the $100 per barrel mark in recent weeks, although the easing of tension in Ukraine helped to temporarily stall gains on Wednesday.
“Developments in the US-Iran nuclear negotiations are helping to calm oil prices as hopes of Iranian barrels returning to the global picture build,” Rystad Energy’s senior vice president Claudio Galimberti said.
“Although not a done deal yet, prices are sliding on news of progress and broad consensus in the talks as it could ultimately see up to 900,000 bpd [barrels per day] of crude added to the market by December this year.”
Negotiators from Iran, the US, Germany, China, Russia, France and the EU have said a resolution could be announced in the next few days.
“After weeks of intensive talks, we are closer than ever to an agreement; nothing has been agreed until everything has been agreed, though,” said Ali Kani, Iran's chief negotiator in Vienna.
“Crude prices were not ready for a run towards $100 and the tweet from Iran’s top negotiator was used as the excuse for the small decline,” said Edward Moya, a senior market analyst at Oanda.
“For oil prices to rally above $100, Russia-Ukraine tensions need to intensify or crude output needs to continue to fall short of rising demand.”
Benchmark crude prices surged by about $15 a barrel in January, breaching the $90 a barrel threshold for the first time since 2014 on tighter supply, growing demand and production constraints.
While global oil supply rose by 560,000 bpd to 98.7 million bpd in January, the uptrend was “slowed by a chronic Opec+ underperformance versus targets that has taken 300 million bpd of oil off the market since the start of 2021", the International Energy Agency said in a report this month.
A further 1.3 million bpd of Iranian crude supply could gradually be brought to market should sanctions be lifted, it said.
If Iran is able to resume oil exports free of sanctions, then markets would loosen considerably, particularly in the second half of the year, according to Emirates NBD.
“Besides a decision by Opec+ to increase production, a deal with Iran is the only thing that can materially change the supply and demand balances in 2022,” Mr Galimberti said.
“While an Iranian supply increase would not completely close the crude supply-demand gap this year, it would be significantly reduced.”
For oil prices to rally above $100, Russia-Ukraine tensions need to intensify or crude output needs to continue to fall short of rising demand
Edward Moya,
senior market analyst at Oanda
The agency expects oil demand to rise by 3.2 million bpd this year to 100.6 million bpd as global economies recover from the coronavirus-induced slowdown.
Looking ahead, Mr Moya expects the bullish trend in the market to continue.
“Crude prices initially rose as the Ukraine-Russia conflict persisted and as short-term supply issues remained. Energy traders were fixated over the move above $100 for the dated Brent benchmark. The oil market is getting tighter and oil prices seem like they are only going to go higher,” he said.
Emirates NBD has also revised its forecasts for Brent to $88 a barrel in the first quarter (down from $75 a barrel previously), with the annual average expected at $78 a barrel (compared to $70 a barrel earlier).
The bank said it changed its outlook due to the “geopolitical risks in the market".
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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
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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This year’s winners of the US$4 million Sheikh Zayed Future Energy Prize will be recognised and rewarded in Abu Dhabi on January 15 as part of Abu Dhabi Sustainable Week, which runs in the capital from January 13 to 20.
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
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