Oil markets ease after three days of gains

An oil tanker is being loaded at Saudi Aramco’s Ras Tanura oil refinery and oil terminal in Saudi Arabia. The kingdom is temporarily halting oil shipments through the Red Sea shipping lane of Bab Al-Mandab. (Reuters)
Updated 27 July 2018
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Oil markets ease after three days of gains

TOKYO: Oil prices edged lower on Friday in quiet trading after three days of gains, but took support from Saudi Arabia halting crude transport through a key shipping lane, falling US inventories and easing trade tensions between Washington and Europe.
Brent futures were down 5 cents at $74.49 a barrel by 0319 GMT, after gaining 0.8 percent on Thursday. They are heading for a near 2 percent gain this week, the first weekly increase in four.
US West Texas Intermediate futures were 5 cents lower, at $69.56, after rising nearly 0.5 percent in the previous session. The contract is heading for a 1.3 percent weekly loss, a fourth week of declines.
Saudi Arabia said on Thursday it was “temporarily halting” oil shipments through the Red Sea shipping lane of Bab Al-Mandab after an attack by Yemen’s Iran-aligned Houthi movement.
Any move to block the Bab Al-Mandeb, which is between the coasts of Yemen and Africa at the southern end of the Red Sea, would virtually halt oil shipments through Egypt’s Suez Canal and the SUMED crude pipeline that link the Red Sea and Mediterranean.
“The fundamentals of the oil market haven’t really changed. We will have sporadic news coming out of the more volatile regions every now and again, but the market is still oversupplied,” said Peter Lee, Asian oil and gas analyst at BMI Research in Singapore.
“The picture is getting a little better but it is not going to be until 2019 when we start to see more material signs of a deficit building in the market,” he said. “We expect to see range-bound trading till the end of the year.”
An estimated 4.8 million barrels per day of crude oil and refined products flowed through the Bab Al-Mandeb strait in 2016 toward Europe, the United States and Asia, according to the US Energy Information Administration.
However, Saudi Arabia has the Petroline, also known as the East-West Pipeline, which mainly transports crude from fields clustered in the east to Yanbu for export. That could offset a bottleneck caused by Bab Al-Mandeb’s closure.
US President Donald Trump and Jean-Claude Juncker, president of the European Commission, the EU’s executive body, struck a surprise deal on Wednesday that ended the risk of an immediate trade war between the two powers.
A trade war would likely hit demand for commodities like oil, which is used heavily in shipping, construction and other economic activity.
US crude oil inventories last week tumbled more than expected to their lowest level since 2015, the EIA said on Wednesday, as US gasoline and distillate stockpiles fell.


Energy shocks ‘biggest risk for Middle East business’

Updated 12 November 2018
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Energy shocks ‘biggest risk for Middle East business’

  • Price volatility a bigger concern than unemployment or terrorist attacks, World Economic Forum survey finds
  • The only other part of the world were the energy price was the main concern was in Eurasia

DUBAI: Potential energy price shocks are the biggest worry facing business leaders in the Middle East and North Africa, according to a report on global risk by the World Economic Forum (WEF).
The prospect of sharp volatility in energy prices — the main government revenue stream in most of the countries of the Arabian Gulf — is a bigger concern than unemployment or terrorist attacks in the region, the WEF survey found.
The only other part of the world were the energy price was the main concern was in Eurasia, which includes resource-rich Russia, and parts of central Asia.
In the three biggest regions as defined by WEF — North America, Europe and East Asia/Pacific — the fear of cyberattack has grown steadily over the past three years and is now the main concern.


Worries about failures of national and regional government was also a significant risk factor in many parts of the world, especially in emerging markets.
The findings — based on responses from 12,500 executives in 140 economies — were presented at a media briefing at the WEF’s Global Future Councils meeting in Dubai.
Hussain Sajwani, the Emirati businessman who founded the Damac Properties real estate group, said that the region faced two distinct types of challenge: Global ones, like financial, terror or cyber related threats; and risk specific to the Middle East, like oil price volatility and political challenges.
Sajwani, who is a business partner of President Donald Trump, said another issue for the region was the continuing commitment of the US.

“The one major thing that concerns me is American foreign policy in the region, and how far it is going to be involved going forward, and take a leadership role like they have done in the past. Their role is very crucial to create a balance of power, and that concerns me,” he said.
Sajwani warned it was not accurate to view MENA as one uniform region.
“There are great differences between a rich country like the UAE, and a poor one like Yemen,” he said, pointing also to different levels of political stability in different countries.
Borge Brende, president of WEF, said that the current oil price gave Saudi Arabia “a unique position to go on with its reforms and to diversify its economy.”
He added: “This is something that Saudi Arabia has committed to and it is an important path toward securing investment that will create jobs. It has a young population and more young people are joining the workforce in coming years.
“The reason Saudi Arabia is in a fortunate position is the revenue from oil earnings but we have seen other nations like the UAE that have been diversifying and also building strong sovereign wealth funds that you can direct toward research and development.”
Mirek Dusek, the executive in charge of WEF’s Middle East and North Africa unit, said: “Given the current geopolitical uncertainty globally, cooperation within and among regions is of critical importance. Understanding the evolving risks in different regions is therefore top of mind for business leaders.”