The International Energy Agency raised its 2023 global oil demand estimates again on Tuesday and said the current pessimism in the market is in “stark contrast” to the agency’s expectations of a tighter market in the second half of the year.
The agency now expects global crude demand to rise by 2.2 million barrels per day in 2023, an increase of 200,000 bpd from its April forecast.
“Prices were pressured lower by muted industrial activity and higher interest rates, which, combined, have led to recessionary scenarios gaining traction and worries of a downward shift in oil demand growth,” the agency said in its monthly oil market report on Tuesday.
Brent crude, the benchmark for two thirds of the world’s oil, has lost more than 12 per cent of its value this year amid demand concerns and a regional banking crisis in the US, which rattled financial markets.
The international benchmark was trading 0.23 per cent lower at $75.06 a barrel at 4pm UAE time on Tuesday. West Texas Intermediate, the gauge that tracks US crude, was down 0.20 per cent at $70.97 a barrel.
The agency, which expects crude demand to exceed supply by 2 million bpd in the second half of this year, said demand recovery in China, the world’s largest crude importer, has beaten estimates, reaching a record 16 million bpd in March.
China, which reopened its economy earlier this year, will account for about 60 per cent of global demand growth in 2023, the agency said.
Meanwhile, Russian oil exports hit 8.3 million bpd in April, the highest since Moscow’s invasion of Ukraine last year, the agency said.
“By our estimates, Moscow did not deliver its announced 500,000 bpd supply cut in full. Indeed, Russia may be boosting volumes to make up for lost revenue.”
The country’s oil export revenue rose by $1.7 billion to $15 billion in April but was down 27 per cent from a year earlier, the IEA said.
From April through December, Opec+ supply is set to fall by 850,000 bpd as the group enforces its additional supply cuts, the agency said.
For the full year, global crude supply is expected to rise by 1.2 million bpd, led by the US and Brazil.
Last month, Opec+ members Saudi Arabia, the UAE, Iraq, Kuwait, Oman and Algeria announced voluntary output cuts of 1.16 million bpd.
The cuts, which will be in place from May until the end of the year, are aimed at ensuring oil market stability, the producers said at the time.
Despite significant disruptions to the supply side, including the shutdown of the Iraq-Turkey export pipeline, wildfires in Canada, worker protests in Nigeria and maintenance-related cuts in Brazil, there has been no notable increase in prices or visible reduction in stocks, the IEA said.
In its latest oil market report, Opec stuck to its 2023 growth projection for oil demand but slightly lowered its forecast for regions other than China.
The crude producers' group expects world oil demand to hit 101.9 million bpd this year.
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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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Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
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How has net migration to UK changed?
The figure was broadly flat immediately before the Covid-19 pandemic, standing at 216,000 in the year to June 2018 and 224,000 in the year to June 2019.
It then dropped to an estimated 111,000 in the year to June 2020 when restrictions introduced during the pandemic limited travel and movement.
The total rose to 254,000 in the year to June 2021, followed by steep jumps to 634,000 in the year to June 2022 and 906,000 in the year to June 2023.
The latest available figure of 728,000 for the 12 months to June 2024 suggests levels are starting to decrease.
England v South Africa Test series:
First Test: at Lord's, England won by 211 runs
Second Test: at Trent Bridge, South Africa won by 340 runs
Third Test: at The Oval, July 27-31
Fourth Test: at Old Trafford, August 4-8
The 12 breakaway clubs
England
Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, Tottenham Hotspur
Italy
AC Milan, Inter Milan, Juventus
Spain
Atletico Madrid, Barcelona, Real Madrid
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Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
UK’s AI plan
- AI ambassadors such as MIT economist Simon Johnson, Monzo cofounder Tom Blomfield and Google DeepMind’s Raia Hadsell
- £10bn AI growth zone in South Wales to create 5,000 jobs
- £100m of government support for startups building AI hardware products
- £250m to train new AI models
