World’s biggest traders see oil at $65-$100 a barrel next year

Traders expect oil storage tanks worldwide to start emptying amid reduced global supplies caused by sanctions against Iran as well as other factors. (Shutterstock)
Updated 11 October 2018
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World’s biggest traders see oil at $65-$100 a barrel next year

  • Oil has rallied this year on expectations that the sanctions, coming into force on Nov. 4, will test the ability of OPEC and others to fill the supply gap
  • Brent crude last week reached $86.74 a barrel, the highest since 2014

LONDON: The world’s biggest trading houses said on Wednesday they saw oil prices not falling below $65 per barrel and possibly breaking above $100 next year as US sanctions on Iran reduce crude exports from the Islamic republic.
Oil has rallied this year on expectations that the sanctions, coming into force on Nov. 4, will test the ability of OPEC and others to fill the supply gap as shipments from OPEC member Iran decline.
Brent crude last week reached $86.74 a barrel, the highest since 2014.
But in 2019, forecasters such as the International Energy Agency say emerging-market crises and trade disputes could dent global demand while rising non-OPEC production adds to supply.
Jeremy Weir, chief executive of Trafigura, said at the Oil & Money conference in London that he would not be surprised to see oil trade at more than $100 per barrel next year.

 

Alex Beard, chief executive for oil and gas at commodity trading company Glencore, said at the same event that he forecast a mid-term oil price of $85-90, as a release of US strategic oil stocks looked remote and would have limited impact anyway.
“I think the sanctions will be very tough. Waivers will be extremely limited, if any, and I don’t see an end to it as the objective is regime change in 2019. I can’t see anything that will affect oil prices dramatically to the downside,” Beard said.
“The European payment mechanism doesn’t shield you if you use the US financial system ... you can pay but don’t expect to be on their Christmas card list.”
Beard added that US infrastructure limitations would limit US crude exports that could otherwise compensate and new refining capacity coming online in 2019 would add further tightness.
The traders said, however, they expected some demand destruction in emerging market economies to help cap oil prices.
The chief executive of Gunvor, Torbjorn Tornqvist, said he saw lower prices next year at $70-$75, citing a slowdown in demand growth and a well-supplied market.
“There will be some Iranian exports but the amount will depend on the price. If oil goes up to $100 a barrel then waivers, if it stays around $80 a barrel then no waivers,” Tornqvist said.
Vitol and BP presented the most bearish views. Vitol Chairman Ian Taylor forecast a price of $65 a barrel.
“We’ve knocked down our demand growth forecast this year and for next year ... I think the only issue is: Will the US pipeline in the Permian (oilfield) manage to deliver a huge increase in the second half of 2019?,” Taylor said.

FASTFACTS

Industry forecasters such as the International Energy Agency say emerging-market crises and trade disputes could dent global demand while rising non-OPEC production adds to supply.


Abu Dhabi aims to lure start-ups with investment in new technology hub

Updated 24 March 2019
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Abu Dhabi aims to lure start-ups with investment in new technology hub

  • The initiative will help Abu Dhabi reduce reliance on oil
  • Mubadala hopes to attract Chinese and Indian companies

ABU DHABI: Abu Dhabi will commit up to $272 million to support technology start-ups, it said on Sunday, in a dedicated hub as part of efforts to diversify its economy.

US tech giant Microsoft will be a strategic partner, providing technology and cloud services to the businesses that join the hub as the capital of the United Arab Emirates continues its push to reduce reliance on oil revenue.
Abu Dhabi derives about 50 percent of its real gross domestic product and about 90 percent of central government revenue from the hydrocarbon sector, according to ratings agency S&P.
The emirate launched a $13.6 billion stimulus fund, Ghadan 21, in September last year to accelerate economic growth. Ghadan means tomorrow in Arabic. The new initiative, named Hub 71, is linked to Ghadan will also involve the launch of a $136 million fund to invest in start-ups, said Ibrahim Ajami, head of Mubadala Ventures, the technology arm of Mubadala Investment Co.
The goal is to have 100 companies over the next three to five years, Ajami said. “The market opportunities in this region are immense,” he added.
Mubadala, with assets of $225 billion and a big investor in tech companies, will act as the driver of the hub, located in the emirate’s financial district.
Softbank will be active in the hub and support the expansion of companies in which it has invested, Ajami said, adding that Mubadala is also aiming to attract Chinese and Indian companies, among others.
Mubadala which has committed $15 billion to the Softbank Vision Fund, plans to launch a $400 million fund to invest in leading European technology companies.
Incentives mapped out by the government include housing, office space and health insurance as part of the $272 million commitment, Ajami said.
Abu Dhabi will also announce a new research and development initiative on Monday linked to the Ghadan 21 plan, according to an invitation sent to journalists.