OPEC holds the cards in oil market

Russian President Vladimir Putin, OPEC Secretary General Mohammed Barkindo and other participants attend the Russian Energy Week 2017 forum in Moscow. The IEA said yesterday that both Russia and Saudi Arabia havea strong incentive to support prices by limiting supply. (AP)
Updated 13 October 2017

OPEC holds the cards in oil market

PARIS: OPEC and its allies have regained some control over the oil market as their production limits have eroded the supply glut that caused prices to plunge, but the IEA warned Thursday further restraint is needed if this balance is to be maintained.
In its regular monthly report, the International Energy Agency said that global oil stocks are likely to dip in 2017 and should mostly be in balance next year assuming unchanged OPEC production.
“A lot has been achieved toward stabilizing the market, but to build on this success in 2018 will require continued discipline,” said the IEA.
Global oil markets have been roiled in recent years as OPEC abandoned in 2014 its traditional role of supporting prices in an effort to retain market share against upstart US oil shale producers.
Oil prices plunged from over $100 per barrel to under $30 last year, squeezing oil firms and wreaking havoc in the economies of oil-producing countries.
Late last year OPEC and a number of other producers led by Russia agreed to throttle their output. The pact, which has now been extended through March 2018, has helped oil prices to climb back above $50 per barrel.
“The next few weeks ahead of the producers’ meeting in Vienna on Nov. 30 will be crucial in shaping their decision on output,” said the Paris-based IEA.
“But there is little doubt that leading producers have re-committed to do whatever it takes to underpin the market and to support the long process of re-balancing,” it added.
The IEA, which advises the leading energy-consuming nations, noted the recent visit by King Salman to Moscow, the first by a Saudi monarch, where a number of investment deals were agreed and hints were dropped about further production limits.
“For Saudi Arabia and Russia, who worked together to forge the OPEC/non-OPEC agreement, there is a strong economic incentive to support oil prices by limiting supply,” said the IEA.
“For 2017 to date, OPEC as a whole and Russia have earned more while pumping less,” it added.
Saudi Arabia has the added interest of wanting to keep crude prices high ahead of a public listing of 5 percent of shares in its giant Saudi Aramco oil firm, which is set to take place next year.
The latest forecasts for global oil demand and other producers show that the ball is in the court of members of the production pact.
“Taking 2018 as a whole, oil demand and non-OPEC production will grow by roughly the same volume,” said the IEA, which expects global oil demand to grow by 1.6 million barrels per day (mbd) this year and 1.4 mbd in 2018.
The IEA added, “It is this current outlook that might act as the ceiling for aspirations of higher oil prices.”
OPEC said in its monthly report this week that oil prices are expected to remain in the $50-55 per barrel range in the next year.
“A rise above that level would encourage US oil producers to expand their drilling activities, otherwise the lower prices could lead to a reduction” in investments, it added.

Saudi Arabia has lion’s share of regional philanthropy

Updated 2 min 43 sec ago

Saudi Arabia has lion’s share of regional philanthropy

  • Kingdom is home to three quarters of region's foundations
  • Combined asets of global foundations is $1.5 trillion

Nearly three quarters of philanthropic foundations in the Middle East are concentrated in Saudi Arabia, according to a new report.

The study, conducted by researchers at Harvard Kennedy School’s Hauser Institute with funding from Swiss bank UBS, also found that resources were highly concentrated in certain areas with education the most popular area for investment globally.

That trend was best illustrated in the Kingdom, where education ranked first among the target areas of local foundations.

While the combined assets of the world’s foundations are estimated at close to $1.5 trillion, half have no paid staff and small budgets of under $1 million. In fact, 90 percent of identified foundations have assets of less than $10 million, according to the Global Philanthropy Report. 

Developed over three years with inputs from twenty research teams across nineteen countries and Hong Kong, the report highlights the magnitude of global philanthropic investment.

A rapidly growing number of philanthropists are establishing foundations and institutions to focus, practice, and amplify these investments, said the report.
In recent years, philanthropy has witnessed a major shift. Wealthy individuals, families, and corporations are looking to give more, to give more strategically, and to increase the impact of their social investments.

Organizations such as the Bill and Melinda Gates Foundation have become increasingly high profile — but at the same time, some governments, including India and China, have sought to limit the spread of cross-border philanthropy in certain sectors.

As the world is falling well short of raising the $ 5-7 trillion of annual investment needed to achieve the UN’s Sustainable Development Goals, UBS sees the report findings as a call for philanthropists to work together to scale their impact.

Understanding this need for collaboration, UBS has established a global community where philanthropists can work together to drive sustainable impact.

Established in 2015 and with over 400 members, the Global Philanthropists Community hosted by UBS is the world’s largest private network exclusively for philanthropists and social investors, facilitating collaboration and sharing of best practices.

Josef Stadler, head of ultra high net worth wealth, UBS Global Management, said: “This report takes a much-needed step toward understanding global philanthropy so that, collectively, we might shape a more strategic and collaborative future, with philanthropists leading the way toward solving the great challenges of our time.”

This week Saudi Arabia said it would provide an additional $100 million of humanitarian aid in Syria, through the King Salman Humanitarian Aid and Relief Center.

The UAE also this week said it had contributed $192 million to a housing project in Afghanistan through the Abu Dhabi Fund for Development.