Oil prices, which endured another roller-coaster ride in 2023, posted their biggest annual drop since 2020 amid persistent concerns about lower demand as well as geopolitical and economic uncertainties.
Brent, the global benchmark for two thirds of the world's oil, shed 0.14 per cent to settle at $77.04 per barrel on Friday, the last trading day of the year. West Texas Intermediate, the gauge that tracks US crude, declined 0.17 per cent to finish at $71.65 a barrel.
Both benchmarks shed more than 10 per cent, or about $8.60, from a year ago – Brent ended 2022 at $85.62 per barrel, while WTI settled at $80.26 – ending two years of gains.
"Despite oil demand growth surprising to the upside and the production cuts by Opec+, oil prices ended lower in 2023 as supply growth also exceeded expectations, resulting in a less undersupplied oil market," Giovanni Staunovo, a strategist at Swiss bank UBS, told The National.
"Oil production in the US and Brazil hit a new record high, while production from cuts-exempted Opec+ members, particularly Iran and Libya, recovered strongly in 2023."
The crude oil market remains downbeat, and a failure to add to gains is now "bringing the oil bears back to the market", Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said in a note on Friday.
"Note that crude oil is set for its biggest yearly decline since 2020; Opec's efforts to curb production and the rising geopolitical tensions in the Middle East remained surprisingly inefficient to boost appetite in oil this year," she said.
Demand growth in 2023 was also hit hard by expectations of an economic slump as central banks around the world tightened monetary policy to tame inflation.
Sentiment in the oil industry turned "decidedly bearish" in November and early December as non-Opec+ supply strength coincided with slowing global oil demand growth, according to the International Energy Agency.
The Israel-Gaza war, which started in early October, initially pushed prices up, although crude soon shed those gains on demand concerns.
Last week, prices again rose on supply concerns after attacks by Houthi rebels in the Red Sea – a key waterway for global trade – forcing shipping companies to reroute their vessels.
The Bab Al Mandeb at the southern edge of the Red Sea and the western part of the Gulf of Aden, is a vital route for oil tankers and vessels travelling between the Arabian Gulf and Asia, as well as to Europe by way of the Suez Canal.
About 12 per cent of the seaborne oil trade and 8 per cent of liquefied natural gas passes through the strait. Last week, oil prices posted their biggest weekly gain since October due to fears about supply disruptions.
"Oil’s geopolitical risk premium – dormant throughout the Israel-Gaza conflict – is reigniting some angst amongst traders as Houthi rebels menace tankers in the Red Sea," analysts at MUFG said.
However, the slowdown in oil demand is expected to continue in 2024, as gross domestic product growth stays below trends in major economies, it said, in addition to a steadily growing electric vehicle industry.
Prices are being weighed down by worries of slow demand growth in the US and China, the world's biggest consumers of crude.
Demand in China, in particular, is expected to slow next year, because the robust post-pandemic activity that helped prop up its economy has begun to fade. The world's biggest importer of crude is projected to consume an additional 500,000 barrels a day in 2024, according to estimates from Bloomberg.
Meanwhile, although US inflation eased in November, it was higher than market expectations, cooling any hopes that the Fed would cut interest rates early next year.
On the supply side, the Opec+ oil producers group will continue output cuts next year as it seeks to better balance the market.
The oil group's members, led by Saudi Arabia and Russia, in November extended their voluntary oil output reductions until the end of the first quarter of 2024 amid concerns over future fuel demand.
The kingdom, the world's largest oil exporter, will keep its voluntary output cut of one million barrels per day until the end of March, while Russia is expected to deepen its cut to 500,000 bpd and extend it until the end of the first quarter of 2024.
In total, the group revealed supply reductions of almost 2.2 million bpd for the first quarter.
Any further moves from Opec+ may result in market movements that may become more volatile, Rania Gule, a market analyst at XS.com, said in a note this week.
"Breaking through either direction in the future will be crucial in determining the true path of the markets," she said.
For 2024, UBS retains a positive outlook, despite a slowdown in oil demand growth, Mr Staunovo said.
"We expect the proactive approach of Opec+ to keep the oil market mostly in balance in 2024."
Company%20profile
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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
More coverage from the Future Forum
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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
The specs
Price, base / as tested Dh12 million
Engine 8.0-litre quad-turbo, W16
Gearbox seven-speed dual clutch auto
Power 1479 @ 6,700rpm
Torque 1600Nm @ 2,000rpm 0-100kph: 2.6 seconds 0-200kph: 6.1 seconds
Top speed 420 kph (governed)
Fuel economy, combined 35.2L / 100km (est)
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Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
