Oil rounded a fourth week of gains on the back of positive news about Covid-19 vaccines and ahead of a meeting of Opec+ producers.
Brent, the international benchmark, under which two-thirds of the world’s oil is traded, registered a weekly gain of 7.2 per cent. The benchmark settled 0.8 per cent higher at $48.18 per barrel yesterday.
West Texas Intermediate, which tracks US crude grades, rounded off the week 8 per cent higher. The benchmark, however, pared its gains and settled 0.39 per cent lower at $45.53 per barrel on Friday.
Opec is set to meet for its annual meeting on December 1, alongside non-member producers led by Russia. The group is set to extend the current level of curbs for another three months.
Opec+ cut a record 9.7 million barrels per day between May and July to balance crude prices after the coronavirus-induced movement restrictions led to a plunge in demand. The alliance has since tapered restrictions and is currently drawing back 7.7m bpd.
The group was set to further taper cuts at the start of the new year. However, analysts say that Opec+ is considering maintaining the current level of cuts until the end of the first quarter of 2021 after lockdowns in some countries following a second wave of infections hit energy demand.
"If Opec+ decides to extend its phase two cuts into 2021, then the crude overhang should disappear by July 2021. But if not, this will take through late 2021,” Energy Aspects said in a note on Thursday.
"We believe there is still broad consensus within Opec+ (including Russia) to extend phase two of its cuts into Q1 2021,” the report said.
Oil has also gained significantly from reports of the efficacy of at least three vaccine trials.
The Pfizer-BioNTech collaboration has proved to be more than 90 per cent effective in clinical trials, while vaccine candidates from pharma companies Moderna and AstraZeneca have also proved efficacy at 90 per cent and 70 per cent.
Demand for crude is also picking up in some parts of the world.
"Global demand seems to have recovered beyond 95 per cent of pre-crisis levels, with Asia especially sticking out in terms of positive dynamics more recently,” Norbert Rücker, head economics and next generation research at Julius Baer, said.
"The upcoming petro-nations’ meeting should bring an extension of the supply cuts, in order to not threaten the oil-market recovery and to make room for Libya’s export boost,” he added.
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
