Opec+ will most likely roll over its existing output cuts when it meets on April 3 despite the recent market turmoil that dragged oil prices to their lowest in more than a year, according to analysts.
The group of 23-oil producing countries, which slashed its collective output by 2 million barrels per day last year, has so far taken a “wait and see” approach as governments and regulators attempt to quell panic in global financial markets.
Brent, the benchmark for two thirds of the world's oil, fell to a 15-month low amid a banking crisis in the US and Switzerland. It is down about 7 per cent since the start of the year.
The international benchmark was last trading at $79.89 a barrel on Friday after surging to nearly $140 last year following Russia’s invasion of Ukraine.
“Crude’s macro-driven price collapse has raised questions about whether Opec+ will step in to stop the rout, and our answer is no, not yet,” Energy Aspects analysts Amrita Sen and Matthew Holland said in a note last month.
“The group fears that any action taken in reaction to non-fundamental drivers could create unintended consequences. It should be clear that should any deterioration occur in its balances, the group will backstop the market as it has always done,” the analysts said.
Less than two weeks ago, Opec further raised its 2023 forecast for Chinese oil demand growth as the country gradually reopens its economy after ending nearly three years of zero-Covid regulations.
But, the group maintained this year's crude demand estimate at 2.3 million bpd on concerns of an economic slowdown in the US and Europe.
"We foresee no policy change," said Ha Nguyen, executive director for global oil at S&P Global Commodity Insights.
"We expect [oil] prices ahead to increase slightly due in large part to a rise in jet fuel demand within China and higher gasoline demand in the Western portion of the world ... rising demand in the second half of 2023 will tighten the supply-demand balances."
Opec Secretary General Haitham Al Ghais has said that the group is seeing a “divided market” with one segment showing signs of “promising” growth and the other experiencing a decline.
“There is phenomenal demand growth in Asia [but] what concerns us more is actually the slowdown we see in Europe and the US in terms of the financial situation [and] the inflation,” Mr Al Ghais said at the CeraWeek energy conference in Houston this month.
Central banks aggressively raised interest rates last year to tame high inflation as the Ukraine war sent shockwaves across global commodity and food markets.
Last month, the US Federal Reserve raised interest rates by 25 basis points and hinted that it may pause future rate increases following the recent turmoil in financial markets.
The European Central Bank, which recently raised interest rates by 0.5 percentage points, has said that there was no need for its monetary policy plans to be adjusted.
Opec+ may be hesitant to suggest further production cuts because it fears that the market might see it as an indication of weak demand, despite the fact that the group is seeing “strong” demand in Asia and steady fuel consumption in regions to the west of Suez, according to Energy Aspects.
“For Opec+, oil-specific fundamentals remain unchanged, at least for now.”
The International Energy Agency expects global oil demand to rise “sharply” this year on the back of pent-up Chinese demand and a rebound in air traffic.
In its latest oil market report, the agency said oil demand growth would “accelerate” to 2.6 million bpd in the fourth quarter.
However, rising crude stocks in the US and stubborn Russian production in the face of western sanctions prompted Goldman Sachs to lower its oil price forecasts for 2023.
The investment bank now expects Brent to trade at $94 a barrel for the 12 months ahead and $97 in the second half of next year.
It had previously projected that the benchmark would trade at $100 in both scenarios.
While near-term oil prices are likely to remain volatile — influenced by the current financial market turmoil — Swiss bank UBS has retained a positive outlook.
It expects rising Chinese crude imports and demand, plus lower Russian production, to tighten up the oil market and lift prices over the coming quarters.
"We think fundamentals support a tightening of the oil market," UBS strategist Giovanni Staunovo, said in a research note last week.
"China's recovery is pushing Chinese crude imports higher, and the US saw a large drop in refined product inventories" in the March 20-24 week, he said.
"More of this data should support prices. So far, the pledged production cut by Russia is not visible in Russian crude and refined product exports, which are both higher versus February."
Last month, Goldman Sachs revised up its first quarter and 2023 full-year GDP growth forecast for China to 4 per cent and 6 per cent, respectively, from 2.7 per cent and 5.5 per cent previously. China's economy grew about 3 per cent last year.
In January, the investment bank said the reopening of China’s economy and a full recovery in the country's domestic demand may raise global output by around one per cent in 2023 and lead to a rally in oil prices.
Carole Nakhle, chief executive at Crystol Energy told The National the factor that is probably putting the most "pressure on oil markets is the economic outlook particularly whether the collapse of certain banks will lead to a full-blown crisis or not”.
“The situation is still unfolding hence Opec+ might decide to wait for greater clarity before making output changes,” she said.
In January, the International Monetary Fund raised its global economic growth estimate for this year to 2.9 per cent from a previous forecast of 2.7 per cent, but warned that the fight against inflation would continue to weigh on the global economy along with the Ukraine war.
THE BIO
Age: 33
Favourite quote: “If you’re going through hell, keep going” Winston Churchill
Favourite breed of dog: All of them. I can’t possibly pick a favourite.
Favourite place in the UAE: The Stray Dogs Centre in Umm Al Quwain. It sounds predictable, but it honestly is my favourite place to spend time. Surrounded by hundreds of dogs that love you - what could possibly be better than that?
Favourite colour: All the colours that dogs come in
Attacks on Egypt’s long rooted Copts
Egypt’s Copts belong to one of the world’s oldest Christian communities, with Mark the Evangelist credited with founding their church around 300 AD. Orthodox Christians account for the overwhelming majority of Christians in Egypt, with the rest mainly made up of Greek Orthodox, Catholics and Anglicans.
The community accounts for some 10 per cent of Egypt’s 100 million people, with the largest concentrations of Christians found in Cairo, Alexandria and the provinces of Minya and Assiut south of Cairo.
Egypt’s Christians have had a somewhat turbulent history in the Muslim majority Arab nation, with the community occasionally suffering outright persecution but generally living in peace with their Muslim compatriots. But radical Muslims who have first emerged in the 1970s have whipped up anti-Christian sentiments, something that has, in turn, led to an upsurge in attacks against their places of worship, church-linked facilities as well as their businesses and homes.
More recently, ISIS has vowed to go after the Christians, claiming responsibility for a series of attacks against churches packed with worshippers starting December 2016.
The discrimination many Christians complain about and the shift towards religious conservatism by many Egyptian Muslims over the last 50 years have forced hundreds of thousands of Christians to migrate, starting new lives in growing communities in places as far afield as Australia, Canada and the United States.
Here is a look at major attacks against Egypt's Coptic Christians in recent years:
November 2: Masked gunmen riding pickup trucks opened fire on three buses carrying pilgrims to the remote desert monastery of St. Samuel the Confessor south of Cairo, killing 7 and wounding about 20. IS claimed responsibility for the attack.
May 26, 2017: Masked militants riding in three all-terrain cars open fire on a bus carrying pilgrims on their way to the Monastery of St. Samuel the Confessor, killing 29 and wounding 22. ISIS claimed responsibility for the attack.
April 2017: Twin attacks by suicide bombers hit churches in the coastal city of Alexandria and the Nile Delta city of Tanta. At least 43 people are killed and scores of worshippers injured in the Palm Sunday attack, which narrowly missed a ceremony presided over by Pope Tawadros II, spiritual leader of Egypt Orthodox Copts, in Alexandria's St. Mark's Cathedral. ISIS claimed responsibility for the attacks.
February 2017: Hundreds of Egyptian Christians flee their homes in the northern part of the Sinai Peninsula, fearing attacks by ISIS. The group's North Sinai affiliate had killed at least seven Coptic Christians in the restive peninsula in less than a month.
December 2016: A bombing at a chapel adjacent to Egypt's main Coptic Christian cathedral in Cairo kills 30 people and wounds dozens during Sunday Mass in one of the deadliest attacks carried out against the religious minority in recent memory. ISIS claimed responsibility.
July 2016: Pope Tawadros II says that since 2013 there were 37 sectarian attacks on Christians in Egypt, nearly one incident a month. A Muslim mob stabs to death a 27-year-old Coptic Christian man, Fam Khalaf, in the central city of Minya over a personal feud.
May 2016: A Muslim mob ransacks and torches seven Christian homes in Minya after rumours spread that a Christian man had an affair with a Muslim woman. The elderly mother of the Christian man was stripped naked and dragged through a street by the mob.
New Year's Eve 2011: A bomb explodes in a Coptic Christian church in Alexandria as worshippers leave after a midnight mass, killing more than 20 people.
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From Europe to the Middle East, economic success brings wealth - and lifestyle diseases
A rise in obesity figures and the need for more public spending is a familiar trend in the developing world as western lifestyles are adopted.
One in five deaths around the world is now caused by bad diet, with obesity the fastest growing global risk. A high body mass index is also the top cause of metabolic diseases relating to death and disability in Kuwait, Qatar and Oman – and second on the list in Bahrain.
In Britain, heart disease, lung cancer and Alzheimer’s remain among the leading causes of death, and people there are spending more time suffering from health problems.
The UK is expected to spend $421.4 billion on healthcare by 2040, up from $239.3 billion in 2014.
And development assistance for health is talking about the financial aid given to governments to support social, environmental development of developing countries.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
