Oil steadies on China recovery hopes after 2% drop

Oil prices steadied on Tuesday after falling nearly 2 per cent the previous day amid signs of an economic recovery in China, the world’s largest crude importer.

Brent, the benchmark for two thirds of the world’s oil, was trading 0.20 per cent higher at $84.93 a barrel at 11.55am UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 0.19 per cent at $80.98 a barrel.

On Monday, Brent settled 1.8 per cent lower at $84.76, while WTI was down 2.05 per cent at $80.83.

China's economy, the world’s second-largest, grew at a faster-than-expected pace in the first quarter as the lifting of Covid-19 curbs earlier this year helped improve consumer spending.

The country’s gross domestic product increased by 4.5 per cent on a yearly basis in the first three months of the year, higher than the 2.9 per cent recorded in the previous quarter, according to data from the National Bureau of Statistics.

The market was expecting China’s economy to grow by 4 per cent in the first quarter, Emirates NBD said in a research note.

China, which followed a strict zero-Covid policy for nearly three years, is set to be a key driver of crude demand this year.

"A strong Chinese growth ... means a potential boost to energy and raw material prices, that would boost inflation, get the central bankers’ hands tighter and have a reduced positive impact for equities," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Susan Joho, a Julius Baer economist, said that Chinese economic recovery is "on track" after first quarter data exceeded expectations.

"We expect growth momentum to ease after the strong Q1 (first quarter), but because of the low base from last year due to lockdowns, year-on-year growth will continue to accelerate," said Ms Joho.

The International Monetary Fund estimates China's economy will expand about 5.2 per cent in 2023, following a 3 per cent expansion in 2022, as it benefits from a full reopening this year.

The International Energy Agency expects global oil demand to rise by 2 million barrels per day to a record 101.9 million bpd in 2023.

Oil futures ended lower on Monday as investors worried that higher inflation from a recent surge in energy prices may prompt the US Federal Reserve to adopt a more aggressive monetary policy.

“The economy is showing resilience and while normally that is good news for the crude demand outlook, that is disrupting calls for a peak in Fed tightening,” said Edward Moya, senior market analyst at Oanda.

“The oil market will soon have to deal with recession fears but for now it should be a choppy trade.”

Last week, the IMF trimmed its forecast for global growth this year and next by 0.1 percentage points to 2.8 per cent and 3 per cent, respectively.

The global economy faces a “rocky” recovery as geopolitics, monetary tightening and inflation continue to weigh on growth, the fund said.

Earlier this month, Opec+ producers said they would make voluntary oil production cuts of 1.16 million bpd from May until the end of December to support oil market stability.

Russia, a part of the 23-member alliance of producers, also said it would extend its output cut of 500,000 bpd until the end of this year.

Moscow had previously pledged to curb its production until June in response to the price caps imposed by the West on exports of its crude oil and refined products.

The bio

Favourite book: Kane and Abel by Jeffrey Archer

Favourite quote: “The world makes way for the man who knows where he is going.” - Ralph Waldo Emerson, American essayist

Favourite Authors: Arab poet Abu At-Tayyib Al-Mutanabbi

Favourite Emirati food: Luqaimat, a deep-fried dough soaked in date syrup

Hobbies: Reading and drawing

On Women's Day

Dr Nawal Al-Hosany: Why more women should be on the frontlines of climate action

Shelina Janmohamed: Why shouldn't a spouse be compensated fairly for housework?

Samar Elmnhrawy: How companies in the Middle East can catch up on gender equality

The National Editorial: Is there much to celebrate on International Women's Day 2021?

Jeff Buckley: From Hallelujah To The Last Goodbye
By Dave Lory with Jim Irvin

War 2

Director: Ayan Mukerji

Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana

Rating: 2/5

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Conflict, drought, famine

Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.

Band Aid

Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.

'The worst thing you can eat'

Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.

Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:

Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.

Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.

Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.

Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.

Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.

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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