Fall in oil prices reflects fears over economic slowdown

Crude prices continued to slide despite the first drawdown on US crude stocks in several weeks. Above, a maze of crude oil pipes and valves at the Strategic Petroleum Reserve in Freeport, Texas (Reuters)
Updated 02 June 2019

Fall in oil prices reflects fears over economic slowdown

  • Markets found themselves torn once again between supply fears and a looming economic slowdown
  • OPEC’s oil production dropped to a four-year low of 30.17 million barrels per day (bpd) in May

RIYADH: The downward movement in oil prices last week seemed unjustified given the current strong market fundamentals, as markets found themselves torn once again between supply fears and a looming economic slowdown. The Brent crude price closed the week closer to $60 per barrel.
OPEC’s oil production dropped to a four-year low of 30.17 million barrels per day (bpd) in May, according to a Reuters survey, with exports from Iran tumbling to around 400,000 bpd.
Crude prices continued to slide despite the first drawdown on US crude stocks in several weeks. Prices mostly dip on macroeconomic growth concerns, with the US-China trade dispute continuing to overshadow sentiment on the global oil markets.
However, Chinese crude oil imports hit a record 10.2 million bpd, marking a massive increase of 1.2 million bpd year-on-year, tempering concerns over the impact of a trade war on the global economy and oil demand.
One of the main reasons that no oil shortages have materialized yet is that Asia refiners have already shut down 2-3 million bpd of refining capacity for planned maintenance, which will continue throughout June. This seasonal maintenance contributed to relatively lower demand.
Since Asian refiners buy almost 60 percent of their crude intake from the Arabian Gulf, relative prices for sour crudes have been robust. After those facilities’ initial runs on mostly light sweet crude oil from the US shale exports, they began taking more sour medium crude as upgrading units have gone into service.

  • Faisal Mrza is an energy and oil market adviser. He was formerly with OPEC and Saudi Aramco. Reach him on Twitter: @faisalmrza


UAE to impose 50% tax on soft drinks in health drive

Updated 21 August 2019

UAE to impose 50% tax on soft drinks in health drive

  • The 50% tax on soft drinks and 100% on vaping products start Jan. 1, 2020
  • The government says the taxes are necessary to help persuade people to make healthier choices

DUBAI: The UAE government has announced new taxes of up to 100 percent aimed at vaping and soft drinks, in a bid to reduce the consumption of unhealthy products.

Starting Jan. 1, 2020, the new list of taxable products will include sugary and sweetened soft drinks, as well as powders that can be used to make drinks, and electronic smoking devices.

A statement on state-run news agency WAM said the step is aimed at reducing “consumption of unhealthy goods and modifying consumers’ behavior.”

The Cabinet decision, will add a 50 percent tax on soft drinks with added sugar, in form of a liquid, concentrate, powders, extracts or any product that may be converted into a drink.

Vaping devices and the associated products will be taxed at 100%. (File/Shutterstock)

“The decision also requires manufacturers to clearly identify the sugar content in order for consumers to make sensible healthy choices,” the statement read.

The cabinet also announced the introduction of a 100 percent tax on electronic smoking devices - irrespective of whether they contain nicotine or tobacco - and the liquids used in the devices.

The UAE government first introduced a tax on specific goods deemed harmful to human health in 2017.