Oil prices rallied on Monday after media reports that the 23-member Opec+ alliance is considering slashing output by more than 1 million barrels per day, which would be its largest output cut since the start of the Covid-19 pandemic.
Brent, the benchmark for two thirds of the world’s oil, was trading 4.23 per cent higher at $88.74 a barrel at 10.05pm UAE time on Monday. West Texas Intermediate, the gauge that tracks US crude, was up 5.04 per cent at $83.50 a barrel.
Both benchmarks posted their first quarterly loss in two years at the end of a volatile trading week on Friday. Brent fell by about 22 per cent in the three months to the end of September, while WTI shed about 25 per cent.
Global recession fears, a strong US dollar, surging inflation and monetary tightening by central banks around the world have continued to weigh on the market.
The International Monetary Fund, the World Bank, the Institute of International Finance and the Organisation for Economic Co-operation and Development (OECD) have all slashed their global economic growth forecasts for this year.
Opec+ plans to meet in Vienna on October 5, their first in person meeting since March 2020. An output cut of the suggested size would provide a stronger floor to prices, boosting them towards $90 a barrel or more.
“The fact that this is not a virtual meeting any more and partners want to meet in person is an indication for traders and investors that … the meeting is not about the potential half-a-million production cut,” said Naeem Aslam, chief market analyst at AvaTrade.
“Reducing oil supply by that much may not do the job,” he said, adding that the alliance “will have to devise a strategy that can support their desired level of price, which is defiantly above the $80 market”.
Opec+ agreed in the spring of 2020 to cumulatively cut crude production by a record 9.7 million barrels per day as it faced a pandemic-induced crash in oil prices. The alliance then gradually whittled down the cuts over the past two years.
“In order to prevent a further disorderly unwinding in oil markets, Opec+ is likely to cut output for November levels onward by a larger degree than what they planned for October, with as much as 500,000 barrels per day to 1 million bpd potentially being cut,” Emirates NBD economists Khatija Haque and Edward Bell said in a research note on Monday.
In its outlook report last month, Opec kept its global oil demand forecast unchanged for this year despite headwinds from rising inflation and interest rates, as well as the continuing war in Ukraine. It expects global oil consumption in 2022 to average 100 million bpd.
Last month, the International Energy Agency slashed its estimates for 2022 global oil demand growth to 2 million barrels per day, marginally down from its 2.1 million bpd projection in August.
“We may start to see guidance from Opec+ take its cues from global central banks and adopt a more 'hawkish' tone on oil production,” Mr Bell said.
“Our oil price assumptions for the end of 2022 and into 2023 assumed that Opec+ would adopt a more interventionist stance in the market.”
Emirates NBD expects oil prices to average $105 a barrel for Brent and $95 a barrel for WTI in 2023.
“The challenge in cutting output will be to avoid pushing prices up too much that it exacerbates the pending slowdown in demand growth by making fuel unaffordable for many economies already dealing with high inflation and tighter monetary policy,” Mr Bell said.
“Thus, while we may get a cut now, it doesn’t necessarily mean Opec+ will keep moving in a downward direction on production going forward.”
UAE currency: the story behind the money in your pockets
The Africa Institute 101
Housed on the same site as the original Africa Hall, which first hosted an Arab-African Symposium in 1976, the newly renovated building will be home to a think tank and postgraduate studies hub (it will offer master’s and PhD programmes). The centre will focus on both the historical and contemporary links between Africa and the Gulf, and will serve as a meeting place for conferences, symposia, lectures, film screenings, plays, musical performances and more. In fact, today it is hosting a symposium – 5-plus-1: Rethinking Abstraction that will look at the six decades of Frank Bowling’s career, as well as those of his contemporaries that invested social, cultural and personal meaning into abstraction.
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The five pillars of Islam
Biog
Mr Kandhari is legally authorised to conduct marriages in the gurdwara
He has officiated weddings of Sikhs and people of different faiths from Malaysia, Sri Lanka, Russia, the US and Canada
Father of two sons, grandfather of six
Plays golf once a week
Enjoys trying new holiday destinations with his wife and family
Walks for an hour every morning
Completed a Bachelor of Commerce degree in Loyola College, Chennai, India
2019 is a milestone because he completes 50 years in business
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
The biog
Hometown: Cairo
Age: 37
Favourite TV series: The Handmaid’s Tale, Black Mirror
Favourite anime series: Death Note, One Piece and Hellsing
Favourite book: Designing Brand Identity, Fifth Edition
Killing of Qassem Suleimani
New schools in Dubai
UAE currency: the story behind the money in your pockets
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The biog
Age: 59
From: Giza Governorate, Egypt
Family: A daughter, two sons and wife
Favourite tree: Ghaf
Runner up favourite tree: Frankincense
Favourite place on Sir Bani Yas Island: “I love all of Sir Bani Yas. Every spot of Sir Bani Yas, I love it.”
RESULTS FOR STAGE 4
Stage 4 Dubai to Hatta, 197 km, Road race.
Overall leader Primoz Roglic SLO (Team Jumbo - Visma)
Stage winners: 1. Caleb Ewan AUS (Lotto - Soudal) 2. Matteo Moschetti ITA (Trek - Segafredo) 3. Primoz Roglic SLO (Team Jumbo - Visma)
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Mohammed bin Zayed Majlis
UAE currency: the story behind the money in your pockets
Bharat
Director: Ali Abbas Zafar
Starring: Salman Khan, Katrina Kaif, Sunil Grover
Rating: 2.5 out of 5 stars
Killing of Qassem Suleimani
Read more about the coronavirus
KILLING OF QASSEM SULEIMANI
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Killing of Qassem Suleimani
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The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
Mohammed bin Zayed Majlis
