WEEKLY ENERGY RECAP: Despite sell-off, spot market is tight

Workers are seen at the damaged site of Saudi Aramco oil facility in Abqaiq, Saudi Arabia. (Reuters)
Updated 06 October 2019

WEEKLY ENERGY RECAP: Despite sell-off, spot market is tight

  • Demand is strong for Arabian Gulf crude grades after a return to pre-attack production

Oil prices continued to deteriorate for the second week in a row. Brent crude dropped below the $60 barrier for the first time in a month. 

Brent fell to $58.37 per barrel which is close to the level it was before the attacks on Saudi Aramco oil facilities on Sep. 14. 

WTI also fell to $52.81 per barrel. 

Worrying economic news continued to put downward pressure on the market. However, the focus should not be on the slowing economic outlook that is detached from oil market fundamentals. 

The market continues to shrug off the possibility of serious supply threats. Conventional oil discoveries have plunged to a seven-decade low with no signs of any speed recovery amid lower capital expenditure investments. 

This coincides with OPEC oil output falling to an eight-year low in September.

At the same time, output from the US and Russia, also fell to 11.81 million bpd and to 11.24 million bpd respectively.

Right after the Saudi Aramco attacks, many speculators took advantage of the short-lived price spike as a major opportunity to sell older positions and lock in profits. 

However, after oil prices plunged for the second week in a row, money managers reduced their net long positions in Brent futures.

That was largely because speculators have been discouraged by the weakening macroeconomic outlook which of course implies weakened demand for oil.

However, demand remains strong for Arabian Gulf sour crude grades despite a return to normal Saudi pre-attack production levels.

The physical spot market remains extremely tight, reflected in steep Dubai backwardation and higher official sales prices (OSP) for November Arabian Gulf sour crude grades. 

The Russian crude grade, ESPO, also fetched high premiums despite the restoration of supply in the Kingdom. 

Brent-linked crudes are still not economically cheap enough to flow into Asia to compete with the Arabian Gulf sour crudes.

• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalfaeq


Dubai’s Al-Habtoor Group to open representative office in Israel

Updated 20 September 2020

Dubai’s Al-Habtoor Group to open representative office in Israel

  • Al-Habtoor and Fogel both welcomed the landmark agreement that was signed on Sept. 15 in the US
  • The tycoon revealed his plans to open a representative office in Israel

DUBAI: Dubai’s Al-Habtoor Group (AHG) plans to open a representative office in Israel its chairman said, following an historic peace deal signed last week between the UAE and Israel to normalize relations.

Khalaf Ahmad Al-Habtoor, who is AHG founding chairman, welcomed Ampa Group’s co-owner, chairman and CEO Shlomi Fogel at the hospitality conglomerate’s Dubai headquarters. Ampa Group deals in real estate, finance and industry. 

Al-Habtoor and Fogel both welcomed the landmark agreement that was signed on Sept. 15 in the US. 

The UAE and Bahrain signed the Abraham Accords in a ceremony overseen by US President Donald Trump. The two Gulf countries join Egypt and Jordan as the only Arab nations to have full relations with Israel.

“I have been looking forward to this day for a very long time,” Al-Habtoor said. “I have always believed that Emiratis and Israelis have a lot in common. Both peoples are business-oriented and have relied on human talent and ambition more than their countries’ natural resources to build robust, innovative economies. The opportunities that this deal will present are great for both sides. I am confident this will open up new doors and lead to stronger economies, and closer cultural ties between the peoples.”

The tycoon revealed his plans to open a representative office in Israel and said that there was a lot of interest in collaboration.

“We have received a large number of inquiries for collaboration in several fields, ranging from AI and technology, to agriculture, hospitality and trading. The possibilities are endless for both sides in our diversified fields and new ones, and we want to be present to grasp them.”

He previously disclosed that AHG had started talks with Israeli domestic carrier Israir Airlines to open direct commercial flights, “and we are preparing to reveal a few collaborations in the coming days.”

Fogel said that peace would be cemented through successful business collaboration and trade. “Together with our Emirati counterparts we will show the way to live in peace to the rest of the world,” he added.

Fogel was accompanied at the meeting by Ampa Group executives, including Erez Katz and Saar Bracha.

AHG was represented at the meeting by Mohammed Al-Habtoor, Ahmad Al-Habtoor, Maan Halabi, Sanjeev Agarwala and other members of senior management.