Oil prices fell more than 2 per cent on Friday as news emerged of an imminent deal between the US and Iran, despite the looming threat of an escalation in the Ukraine crisis.
Brent, the global benchmark for two thirds of the world's oil, finished the week at $93.54 per barrel, while West Texas Intermediate, the gauge that tracks US crude, ended at $91.07.
"Reports of US and Iran nearing a new nuclear deal couldn't have come at a better time and oil prices are slipping at the prospect of more than a million barrels of crude re-entering the market," said Craig Erlam, senior market analyst at Oanda.
"In the absence of a deal, we could already be talking about triple-figure oil prices. Of course, the risk of a Russian invasion remains heightened so there's plenty of potential for oil prices to head higher if troops do cross the border."
Brent futures, which had moved up to about $97 a barrel at the end of last week, retreated to about $94 a barrel, Emirates NBD said in a note on Thursday.
“Markets may be taking a breather amid the uncertainty of what will happen in Eastern Europe but the declines may also reflect expectation that the Iran nuclear deal may actually move forward,” Edward Bell, senior director of market economics at the bank, said on Friday.
“Energy traders decided to forget about how tight the oil market remains and took some risk off the table as Wall Street hit the sell button with every risky asset over rising geopolitical concerns,” said Edward Moya, a senior market analyst at Oanda.
US President Joe Biden said on Thursday that indicators point towards a Russian invasion of Ukraine, including signs Moscow is carrying out a “false flag operation” to justify it.
Russia has repeatedly denied it has any plans to invade the country and is calling on the US and its Nato allies to take into account Moscow's security concerns.
Mr Biden's remarks came shortly after Ukraine and pro-Russian separatists allegedly exchanged fire across the front line, in what western officials described as a possible pretext created by Moscow to invade.
The UN's political chief Rosemary DiCarlo said tension was “running higher” in Ukraine than at any point since the last Russian incursion into the country in 2014 and called the deepening crisis “extremely dangerous".
“Oil prices are on sale today and whatever weakness is happening will likely be short-lived. Geopolitical tensions should be bullish drivers for crude prices and the risk of $100 oil is still very high over the short-term if Russia invades Ukraine,” said Mr Moya.
“WTI crude is resting at the $90 level and if the pullback continues, massive support lies at the $85 level. Even if energy traders become convinced an Iran nuclear deal will happen, the oil market is too tight for prices to fall below the mid-$80s.”
An escalation in the Ukraine-Russia conflict will lead to an increase in oil and gas prices on the risk of Russian energy companies being sanctioned, Bank of Singapore said in a note.
“Russia supplies one third of Europe’s energy needs and is the world’s second-largest oil exporter. Limitations on Russian energy exports would lead to significant and sustained spikes in energy prices globally, shifting the costs of western sanctions on Russia to energy consumers in the US and Europe,” said Mansoor Mohiuddin, chief economist at the Bank of Singapore.
If there is only a limited conflict that does not lead to sanctions on Russia’s energy exports, then “financial markets globally may not endure a sustained downturn this year after their initial sharp declines”, he said.
Benchmark crude prices surged by about $15 a barrel in January, breaching the $90 a barrel threshold for the first time since 2014 on tighter supply, growing demand and production constraints.
JP Morgan, the largest lender in the US, predicts Brent will “overshoot” to $125 a barrel this year and $150 in 2023 due to underinvestment in the oil and gas sector. Goldman Sachs expects oil to rally to $100 a barrel by the third quarter of this year.
Gold shines bright
The volatility in the market and rising inflation has pushed investors towards safe-haven assets such as gold, with its price increasing during the past two days.
Spot gold rose 1.5 per cent overnight on Thursday to settle at $1,898 an ounce, Emirates NBD said. It was trading at $1,891 an ounce at 9.39am on Friday.
“A month ago, no one wanted to touch gold. Now gold has suddenly become the flavour of the month … [since] investors are scrambling for safe havens as geopolitical risks intensify and fears grow that the central banks might go overboard with tightening monetary policy,” Mr Moya said.
Gold prices declined more than 4 per cent in 2021 after rising 48 per cent over the previous two years as the global economic recovery reduced demand for the metal.
The safe-haven commodity traded between $1,676 and $1,959 an ounce last year, following its best annual performance in a decade in 2020, when it touched a record high of $2,072.50.
While gold has breached the $1,900 level this year, investors might see further bullish momentum if the Ukraine situation intensifies, Mr Moya said.
“Gold has key resistance around the $1,920 to $1,930 zone but if the haven bid remains strong, bullish momentum could support a move towards the $1,970 level.”
Globally, central bank gold reserves rose to about 35,600 tonnes in 2021, the highest level since 1992, according to the International Monetary Fund.
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
Tenants also require a letter of no objection from their landlord before being allowed to list the property.
There is a cost of Dh1,590 before starting the process, with an additional licence fee of Dh300 per bedroom being rented in your home for the duration of the rental, which ranges from three months to a year.
Anyone hoping to list a property for rental must also provide a copy of their title deeds and Ejari, as well as their Emirates ID.
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Bookshops: A Reader's History by Jorge Carrión (translated from the Spanish by Peter Bush),
Biblioasis
TWISTERS
Director: Lee Isaac Chung
Starring: Glen Powell, Daisy Edgar-Jones, Anthony Ramos
1: Commit to countering all types of terrorism and extremism in all their manifestations
2: Denounce violence and the rhetoric of hatred
3: Adhere to the full compliance with the Riyadh accord of 2014 and the subsequent meeting and executive procedures approved in 2014 by the GCC
4: Comply with all recommendations of the Summit between the US and Muslim countries held in May 2017 in Saudi Arabia.
5: Refrain from interfering in the internal affairs of countries and of supporting rogue entities.
6: Carry out the responsibility of all the countries with the international community to counter all manifestations of extremism and terrorism that threaten international peace and security
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
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Company/date started: 2015
Founder/CEO: Mohammed Toraif
Based: Manama, Bahrain
Sector: Sales, Technology, Conservation
Size: (employees/revenue) 4/ 5,000 downloads
Stage: 1 ($100,000)
Investors: Two first-round investors including, 500 Startups, Fawaz Al Gosaibi Holding (Saudi Arabia)
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)
