Saudi Arabia will remain top oil exporter, but ‘cannot ignore’ shale revolution, says IEA

The IEA's Fatih Birol said: ‘In the shale-revolution world, no country is an island. The established producers’ strategy in terms of cuts and limits will have to be reconsidered in light of the huge growth in shale.’ (Reuters)
Updated 05 March 2018
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Saudi Arabia will remain top oil exporter, but ‘cannot ignore’ shale revolution, says IEA

HOUSTON: Saudi Arabia will remain the “most important oil exporting country for many years to come,” but its strategy and that of the rest of the OPEC countries will have to be reconsidered in light of the revolution in the energy world as a result of the boom in US shale production.
That was the message from Fatih Birol, the executive director of the International Energy Agency (IEA) at the CERAWeek by IHS Markit meeting in Houston, Texas.
Birol, who unveiled the IEA’s global oil report at the event, said Saudi Arabia and other “established producers” had limited scope to affect global energy trends over the next five years, and would have to rethink their strategy to take account of the new energy environment.
“In the shale-revolution world, no country is an island. The established producers’ strategy in terms of cuts and limits will have to be reconsidered in light of the huge growth in shale,” he said.
Birol was asked if Saudi Arabia should try to coordinate strategy with shale producers in light of the US boom, with speculation in Houston that OPEC producers were in talks with their American rivals.
“Saudi Arabia will remain the largest and most important exporter, but is not the biggest producer, and there is an important difference. The market has its own dynamics and companies always will look to increase their financial returns. From that angle, the shale producers will continue to grow regardless of any agreement Saudi Arabia might reach with shale producers. That cannot ignore the growth coming from shale,” he said.
The IEA oil report forecast growing demand for crude over the next five years, but also predicted that US shale was on the brink of a “major second wave” that would see American producers supplying more than half of the increased global demand expected to come mainly from China and India. “America will put the stamp on global oil market developments over the next five years,” he said.
The IEA said that its bullish forecasts for shale output were conservative. “We will revise upward if the oil price goes much above $60,” Birol said.
However, Neil Atkinson, head of the IHS oil market team, said it was unlikely prices would head upward significantly in the near future. “It’s difficult to see how prices can move upward much, apart from geopolitical reasons,” he said.


Palestinians in financial crisis after Israel, US moves

Updated 22 March 2019
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Palestinians in financial crisis after Israel, US moves

  • A Ramallah-based economics professor said the Palestinian economy more generally, remain totally controlled by and reliant on Israel
  • Israeli-Palestinian peace efforts have been at a standstill since 2014

RAMALLAH, Palestinian Territories: The Palestinian Authority faces a suffocating financial crisis after deep US aid cuts and an Israeli move to withhold tax transfers, sparking fears for the stability of the West Bank.
The authority, headed by President Mahmud Abbas, announced a package of emergency measures on March 10, including halving the salaries of many civil servants.
The United States has cut more than $500 million in Palestinian aid in the last year, though only a fraction of that went directly to the PA.
The PA has decided to refuse what little US aid remains on offer for fear of civil suits under new legislation passed by Congress.
Israel has also announced it intends to deduct around $10 million a month in taxes it collects for the PA in a dispute over payments to the families of prisoners in Israeli jails.
In response, Abbas has refused to receive any funds at all, labelling the Israeli reductions theft.
That will leave his government with a monthly shortfall of around $190 million for the length of the crisis.
The money makes up more than 50 percent of the PA’s monthly revenues, with other funds coming from local taxes and foreign aid.

While the impact of the cuts is still being assessed, analysts fear it could affect the stability of the occupied West Bank.
“If the economic situation remains so difficult and the PA is unable to pay salaries and provide services, in addition to continuing (Israeli) settlement expansion it will lead to an explosion,” political analyst Jihad Harb said.
Abbas cut off relations with the US administration after President Donald Trump declared the disputed city of Jerusalem Israel’s capital in December 2017.
The right-wing Israeli government, strongly backed by the US, has since sought to squeeze Abbas.
After a deadly anti-Israeli attack last month, Prime Minister Benjamin Netanyahu said he would withhold $138 million (123 million euros) in Palestinian revenues over the course of a year.
Israel collects around $190 million a month in customs duties levied on goods destined for Palestinian markets that transit through its ports, and then transfers the money to the PA.
Israel said the amount it intended to withhold was equal to what is paid by the PA to the families of prisoners, or prisoners themselves, jailed for attacks on Israelis last year.
Many Palestinians view prisoners and those killed while carrying out attacks as heroes of the fight against Israeli occupation.
Israel says the payments encourage further violence.
Abbas recently accused Netanyahu’s government of causing a “crippling economic crisis in the Palestinian Authority.”
The PA also said in January it would refuse all further US government aid for fear of lawsuits under new US legislation targeting alleged support for “terrorism.”

Finance Minister Shukri Bishara announced earlier this month he had been forced to “adopt an emergency budget that includes restricted austerity measures.”
Government employees paid over 2,000 shekels ($555) will receive only half their salaries until further notice.
Prisoner payments would continue in full, Bishara added.
Nasser Abdel Karim, a Ramallah-based economics professor, told AFP the PA, and the Palestinian economy more generally, remain totally controlled by and reliant on Israel.
The PA undertook similar financial measures in 2012 when Israel withheld taxes over Palestinian efforts to gain international recognition at the United Nations.
Abdel Karim said such crises are “repeated and disappear according to the development of the relationship between the Palestinian Authority and Israel or the countries that support (the PA).”
Israel occupied the Gaza Strip and the West Bank, including now annexed east Jerusalem in the Six-Day War of 1967 and Abbas’s government has only limited autonomy in West Bank towns and cities.
“The problem is the lack of cash,” economic journalist Jafar Sadaqa told AFP.
He said that while the PA had faced financial crises before, “this time is different because it comes as a cumulative result of political decisions taken by the United States.”
Abbas appointed longtime ally Mohammad Shtayyeh as prime minister on March 10 to head a new government to oversee the crisis.
Abdel Karim believes the crisis could worsen after an Israeli general election next month “if a more right-wing Israeli government wins.”
Netanyahu’s outgoing government is already regarded as the most right-wing in Israel’s history but on April 9 parties even further to the right have a realistic chance of winning seats in parliament for the first time.
Israeli-Palestinian peace efforts have been at a standstill since 2014, when a drive for a deal by the administration of President Barack Obama collapsed in the face of persistent Israeli settlement expansion in the West Bank.