Crude oil storage tanks are seen at Azzawiya oil refinery, in Zawiyah, west of Tripoli, Libya. Reuters
Crude oil storage tanks are seen at Azzawiya oil refinery, in Zawiyah, west of Tripoli, Libya. Reuters
Crude oil storage tanks are seen at Azzawiya oil refinery, in Zawiyah, west of Tripoli, Libya. Reuters
Crude oil storage tanks are seen at Azzawiya oil refinery, in Zawiyah, west of Tripoli, Libya. Reuters

Where are oil prices heading as market volatility continues?


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Oil prices could head lower than their current levels, as traders expect a swift resolution to the Libyan oil blockade, with demand concerns taking centre stage, analysts have said.

An continuing political crisis in the North African country, an Opec member, has raised concerns about more than one million barrels per day being removed from the oil market.

However, oil prices have tumbled nearly 5 per cent this week as investors turn their attention to Opec+ barrels returning to the market and slowing economic growth in the US and China.

“Adjusted for inflation … oil is extremely cheap. That could entice long-term investors into oil-related assets,” said Hasnain Malik, head of emerging and frontier markets equity strategy at Tellimer.

“But, in the short-term, weak demand growth and output increases point to further downside. It all depends on your time frame," Mr Malik told The National.

Libya’s oil production has more than halved since the country’s eastern-based administration announced it was shutting down oilfields and suspending production amid rising tension with the UN-recognised government in Tripoli. It was producing about 1.2 million barrels per day before the crisis.

The standoff started last month when the head of the Presidency Council in Tripoli attempted to remove long-serving central bank Governor Sadiq Al Kabir and replace him with a rival board.

On Wednesday, the UN mission in Libya said that the two had reached an agreement to appoint a new governor for the central bank, which manages the nation’s oil revenue.

“The Libya factor did not inject much supply risk premium at its peak, now it is even less of a bullish factor, with the rival factions agreeing a compromise deal on the central bank,” said Vandana Hari, founder and chief executive of Vanda Insights.

A view of the Central Bank of Libya in Tripoli. Reuters
A view of the Central Bank of Libya in Tripoli. Reuters

Brent, the benchmark for two-thirds of the world’s oil, has lost more than 19 per cent of its value since reaching a high of $91 a barrel in April, as signs of slowing crude imports in China emerge and Opec+ is widely expected to gradually unwind voluntary supply cuts of 2.2 million bpd, starting next month.

Oil traders have also been paying close attention to US economic data and statements from the Federal Reserve regarding potential interest rate cuts.

“Crude’s recovery from current levels is beholden to US economic sentiment, as it has almost no other prop. I expect Opec+ to remain in a wait-and-watch mode, at least till the upcoming Fed meeting,” Ms Hari told The National.

The US regulator's next policy meeting is scheduled for September 17-18.

The market is "unduly concerned" about additional Opec+ volumes, Giovanni Staunovo, strategist at UBS, said in a research note on Wednesday, further emphasising that the group has made it clear that these additions can be stopped or reversed if market conditions require.

Mr Staunovo also said that Iraq, Kazakhstan and Russia may produce less to compensate for their undercompliance to the agreed Opec+ production cut quotas.

In August, Opec said it received updated compensation plans from Iraq and Kazakhstan for their overproduction in the first seven months of 2024, totalling 1.44 million bpd for Iraq and 699,000 bpd for Kazakhstan.

Last month, Morgan Stanley lowered its global oil demand growth forecast for this year to 1.1 million bpd, from 1.2 million bpd, citing weakness in the Chinese economy.

The investment bank also reduced its Brent price forecast, now expecting prices to average $80 per barrel in the fourth quarter of 2024, down from a previous estimate of $85 per barrel.

China's second-quarter gross domestic product growth slowed to 4.7 per cent on an annual basis, from 5.3 per cent in the first quarter.

The world’s second-largest economy is facing challenges with a real estate crisis, sluggish consumer spending and a deceleration in manufacturing.

ACL Elite (West) - fixtures

Monday, Sept 30

Al Sadd v Esteghlal (8pm)
Persepolis v Pakhtakor (8pm)
Al Wasl v Al Ahli (8pm)
Al Nassr v Al Rayyan (10pm)

Tuesday, Oct 1
Al Hilal v Al Shorta (10pm)
Al Gharafa v Al Ain (10pm)

Arrogate's winning run

1. Maiden Special Weight, Santa Anita Park, June 5, 2016

2. Allowance Optional Claiming, Santa Anita Park, June 24, 2016

3. Allowance Optional Claiming, Del Mar, August 4, 2016

4. Travers Stakes, Saratoga, August 27, 2016

5. Breeders' Cup Classic, Santa Anita Park, November 5, 2016

6. Pegasus World Cup, Gulfstream Park, January 28, 2017

7. Dubai World Cup, Meydan Racecourse, March 25, 2017

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ARM%20IPO%20DETAILS
%3Cp%3E%3Cstrong%3EShare%20price%3A%3C%2Fstrong%3E%20Undisclosed%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ETarget%20raise%3A%3C%2Fstrong%3E%20%248%20billion%20to%20%2410%20billion%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EProjected%20valuation%3A%3C%2Fstrong%3E%20%2460%20billion%20to%20%2470%20billion%20(Source%3A%20Bloomberg)%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ELead%20underwriters%3A%3C%2Fstrong%3E%20Barclays%2C%20Goldman%20Sachs%20Group%2C%20JPMorgan%20Chase%20and%20Mizuho%20Financial%20Group%3C%2Fp%3E%0A
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ENGLAND SQUAD

Goalkeepers: Jack Butland, Jordan Pickford, Nick Pope 
Defenders: John Stones, Harry Maguire, Phil Jones, Kyle Walker, Kieran Trippier, Gary Cahill, Ashley Young, Danny Rose, Trent Alexander-Arnold 
Midfielders: Eric Dier, Jordan Henderson, Dele Alli, Jesse Lingard, Raheem Sterling, Ruben Loftus-Cheek, Fabian Delph 
Forwards: Harry Kane, Jamie Vardy, Marcus Rashford, Danny Welbeck

How the UAE gratuity payment is calculated now

Employees leaving an organisation are entitled to an end-of-service gratuity after completing at least one year of service.

The tenure is calculated on the number of days worked and does not include lengthy leave periods, such as a sabbatical. If you have worked for a company between one and five years, you are paid 21 days of pay based on your final basic salary. After five years, however, you are entitled to 30 days of pay. The total lump sum you receive is based on the duration of your employment.

1. For those who have worked between one and five years, on a basic salary of Dh10,000 (calculation based on 30 days):

a. Dh10,000 ÷ 30 = Dh333.33. Your daily wage is Dh333.33

b. Dh333.33 x 21 = Dh7,000. So 21 days salary equates to Dh7,000 in gratuity entitlement for each year of service. Multiply this figure for every year of service up to five years.

2. For those who have worked more than five years

c. 333.33 x 30 = Dh10,000. So 30 days’ salary is Dh10,000 in gratuity entitlement for each year of service.

Note: The maximum figure cannot exceed two years total salary figure.

Updated: September 04, 2024, 12:14 PM`