Iran won't effect much change during Opec’s sub-committee meeting in the Algerian capital this week, even as it threatened to veto any decision that opposes its national interests, analysts said.
“Unfortunately for Iran, this is as good as a done deal, because the Saudis and the Russians have agreed to do things this way,” said Vandana Hari, Singapore-based analyst at energy consultancy Vanda Insight.
On Thursday, Iranian oil minister Bijan Zanganeh told state petroleum news agency Shana and Bloomberg that Iran would veto any decision by Opec and its allies, that could threaten its ability to get oil to market at a time when its output is being increasingly restricted by US sanctions.
Opec’s sub-committee is expected to discuss output quotas in Algeria on Monday, a decision Iran has termed “illegal”.
Last week, Opec secretary general Mohammed Barkindo told reporters in Fujairah that the organisation looked to ease concerns of all its producers.
However, analysts suggest Iran’s clout may be far eclipsed by the growing proximity between Saudi Arabia and Russia, two of the world’s largest sovereign producers.
“Iran is neither Opec president at the moment, which is the UAE, nor the the joint JMMC [Joint Ministerial Monitoring Committee] president which is Saudi Arabia and Russia,” said Iman Nasseri, managing director, Middle East at London-based Facts Global Energy.
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“No one has significant clout except Saudi. They have the largest spare capacity and largest production [capacity]. Whoever produces more has higher say,” he added.
However, Ms Hari suggested that the Saudi-Russian leadership of the grouping may be amenable to extending an olive branch to Iran given its difficulties getting oil to the market, similar to the flexibility allowed to Tehran during production cuts in 2017.
"They may hold out an olive branch – by not making any changes to Iran’s quota for the time being,” said Ms Hari.
"In any case, the 1 million barrels per day boost agreed in June was to offset the declines from Venezuela, Angola and Mexico. It doesn’t eat into Iran’s market share. “Opec+ will have to ratchet up production much beyond that to offset the losses from Iran,” she added.
However, Tehran, which had earlier relied on Russian and Venezuelan support to back up its arguments in the group is increasingly sidelined by the growing Riyadh-Moscow ties.
“There were a few price hawks at the June 22-23 meeting, who were not too keen on making any changes in the production restraints in place. But they have been quiet since and are unlikely to support Iran,” said Ms Hari.
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UAE currency: the story behind the money in your pockets
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
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.”
GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
