Oil prices steadied on Wednesday after falling nearly 1 per cent in morning trading amid a build-up in US crude stocks and growing fears of a global economic slowdown.
Brent, the benchmark for two thirds of the world’s oil, was 0.50 per cent higher at $80.50 a barrel at 1.18pm UAE time while West Texas Intermediate, the gauge that tracks US crude, was up 0.39 per cent at $75.41 a barrel.
US crude stocks rose by about 15 million barrels in the week that ended on January 6, according to market sources as they cited data from the American Petroleum Institute.
Oil prices inched up on Tuesday after the US Energy Information Administration (EIA) said it expected global consumption of liquid fuels such as petrol, diesel and jet fuel to set a record in 2024.
Global liquid fuel consumption will exceed 100 million barrels per day, on average, in 2023 for the first time since 2019, then average more than 102 million bpd in 2024, the EIA said in its short-term energy outlook.
However, the statistical agency expects crude prices to fall throughout this year and the next on a rise in oil production in the US and other markets.
The EIA expects Brent to average $83 a barrel in 2023 before falling to $78 a barrel next year as global oil inventories build.
The World Bank has said that the global economy is set for a sharp downturn this year, with growth nearly halving and the slowdown affecting all regions.
Global growth is projected to decline to 1.7 per cent in 2023, from the 3 per cent forecast six months ago, the Washington-based lender said in its latest Global Economic Prospects report released on Tuesday.
The World Bank forecasts oil prices at $88 a barrel in 2023 and $80 a barrel in 2024.
“The oil market is digesting a global slowdown that might not be as bad as feared,” said Edward Moya, senior market analyst at Oanda.
“Energy traders still believe that the Opec+ will do whatever is needed to keep prices supported and that includes more production cuts this quarter.”
Brent rose by as much as 3.8 per cent to a session high of $81.37 on Monday on news of top crude importer China reopening its borders after about three years.
The global oil benchmark fell by more than 8 per cent last week, its biggest weekly loss in the first seven days of a new year since 2016.
“Oil seems like it wants to waver right now until we get a better handle on China’s covid surge,” said Mr Moya.
“As China battles an unprecedented surge in Covid cases, everyone wants to see if travel continues to rebound.”
US investment bank Goldman Sachs expects Brent crude to trade at $105 a barrel by the fourth quarter of 2023, driven by a “solid” growth in global oil demand.
It expects oil demand to grow by 2.7 million bpd this year and said the market would be back in a deficit in the second half of 2023.
In October, the Opec+ group of oil-producing countries slashed its collective output by 2 million bpd until the end of 2023.
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
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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
