Barclays sees $2 per barrel impact to oil prices as coronavirus fears threaten demand

Barclays said the actual economic fallout from the coronavirus could be less severe than the 2003 SARS outbreak. (AFP)
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Updated 28 January 2020

Barclays sees $2 per barrel impact to oil prices as coronavirus fears threaten demand

  • More than 100 people have died and over 4,000 cases of the new virus have been confirmed in China
  • Barclays expects the OPEC and other allies to step in and take further measures to keep the markets tight

BENGALURU: Barclays said on Tuesday oil prices will be impacted by $2 per barrel on the potential economic fallout from the coronavirus outbreak in China.
More than 100 people have died and over 4,000 cases of the new virus have been confirmed in China, leading authorities to increase preventive measures, impose travel restrictions and also extend the Lunar New Year holidays to limit the spread of the virus.
The bank sees a $2 per barrel downside to their full-year Brent and WTI forecasts of $62 per barrel and $57 per barrel, respectively.
Compounding the effects of the spillover to economic growth from China and the region, Barclays expects transitory oil demand erosion of about 0.6-0.8 million barrels per day (mb/d) in the first quarter of this year, or 0.2 mb/d for the full year.
“If air passenger traffic in China declined by half in first quarter of 2020, it would likely lead to a 300,000 barrels per day year on year decline in jet-kerosene demand from China,” the bank said adding the fall in road transport would likely be less severe than in the past given reduced reliance on buses.
Barclays expects the Organization of the Petroleum Exporting Countries and other allies to step in and take further measures to keep the markets tight, in case the fall in demand is more acute.
Oil prices have been down for the last six sessions, but the bank said that the market reaction was likely overdone.
Barclays said the actual economic fallout from the coronavirus could be less severe than the 2003 SARS outbreak, given that the new virus seems less lethal than SARS so far and the measures taken by Chinese authorities.
The bank said the geopolitical risks to global supplies remain high as US-Iran tensions could continue to gradually escalate and oil production in Libya could fall further if the blockade of key infrastructure facilities continues.
Brent crude prices are currently trading around $59 per barrel and US WTI at around at $53 per barrel.


A homegrown UAE brand bets on date’s heritage appeal

Updated 23 min 30 sec ago

A homegrown UAE brand bets on date’s heritage appeal

  • Dates are locally sourced by The Date Room from around 20 farms in the Al Ain oasis area of Abu Dhabi
  • UAE farms grow about 475,000 tons of dates a year, a significant percentage of which is exported

DUBAI: When you can answer the classic business question about a unique selling proposition (USP) in six different ways, you likely have a successful product on your hands.

Thankfully, when you are dealing with dates, unusual product features are not a problem.

There are more than 3,000 date varieties around the world, but Emirati brand The Date Room is approaching the sticky business of breaking into an established market with just half a dozen local cultivars.

From the buttery, caramel notes of the golden Kholas date to the lower-carbohydrate Razaiz type, their flavors offer a change from the more commonly available Medjool and Deglet Noor varieties.

Being locally sourced from about 20 farms in the Al-Ain oasis area of Abu Dhabi, they are also introducing UAE residents to the nation’s heritage.

“Emirati dates are unique because they’re generally much richer in taste and texture than others on the market — although they can be smaller in size,” said Tony N. Al-Saiegh, executive director of The Date Room.

The Date Room launched with two luxury boutiques in the UAE last November after founder Ahmed Mohamed bin Salem spotted a gap for local fruit in a market dominated by produce from Saudi farms.

While official market share by origin data is not available, Saudi dates may control close to 90 percent of the UAE’s retail market.

Yet, with an annual production of 755,000 tons, Saudi Arabia trails Egypt, Iran and Algeria, all of which produce in excess of a million tons each year, according to the UN Food and Agriculture Organization.

By contrast, UAE farms grow about 475,000 tons, a significant percentage of which is exported.

Dates are among the world’s oldest cultivated crops. The palm is native to the Middle East, North Africa and South Asia, with origins that go back more than 5,000 years to what is modern-day Iraq.

The appeal of dates has grown considerably in recent years. Their high fiber and mineral profile have led to their classification as a superfood, they have been used for their high natural sugar content in healthy natural alternatives to processed candy bars.

“The Date Room’s main initial motive was the fact that our own farms produce a superior quality of date in every way,” Al-Saiegh said.

“Our families have been enjoying these dates with every meal and occasion for generations, so why not introduce it to the market in a way that makes them available to everyone but also promotes the unique culture of the UAE?”

The company’s annual production runs to about 160 tons.

For now, distribution is restricted to the UAE, but Al-Saiegh says his team is in talks with distributors in India and Indonesia.

With farmers everywhere agonizing over the impact of climate change, what are the challenges facing date farmers, accustomed as their crops are to heat and aridity?

Scientists expect 2019 to be the second-hottest year on record after 2016, and they forecast that by 2070, today’s major producers will suffer from a markedly unsuitable climate.

Despite palm trees being able to tolerate the heat for hundreds of years, Al-Saiegh says his farms are already feeling the impact.

“As the weather gets hotter and the summers get longer, it’s drying out farms and (arable) land. This means more water is required because a lack of water affects the size and texture of the fruit,” he explains.

While the full impact of those changes is some years away, the Abu Dhabi government has focused on conserving the UNESCO World Heritage oasis where the UAE’s dates are grown.

On the other hand, given the way technology has transformed the local agricultural sector with solutions such as vertical, indoor and soilless farms, Al-Saiegh may soon be able to add another distinguishing feature to The Date Room’s USP.

• This report is being published by Arab News as a partner of the Middle East Exchange, which was launched by the Mohammed bin Rashid Al Maktoum Global Initiatives and the Bill and Melinda Gates Foundation to reflect the vision of the UAE prime minister and ruler of Dubai to explore the possibility of changing the status of the Arab region.