When geopolitical crises occurred, major oil price shocks used to inevitably follow, with the sudden price spikes often affecting economies and industries around the world. Surprisingly, that effect has been lessening in recent years.
Instead, market dynamics, supply and demand and economic indicators are playing a more significant role in shaping the price of oil, analysts have said.
This is one of the most geopolitically turbulent periods in decades. Two wars, attacks on commercial vessels in the Red Sea and a production halt by Libya, a major crude producer, have had a surprisingly limited impact on oil markets this year, despite millions of barrels of supply being at stake.
The Ukraine war briefly pushed oil prices to multiyear highs in 2022 as traders feared that western sanctions on Russia’s energy industry would disrupt exports of roughly eight million barrels per day. However, oil futures quickly stabilised as the market adapted by finding alternative buyers and shipping routes.
Brent crude oil, the global benchmark, declined to around $78 per barrel at the end of 2022, despite earlier predictions of reaching $200 per barrel, after peaking near $140 in March that year.
In recent months, the risk of an all-out regional war in the Middle East – a region responsible for about a third of the world's oil production – has dramatically increased, with Israel’s war in Gaza escalating into Lebanon.
Israel and Iran – one of the world’s largest oil producers – have engaged in a series of “tit for tat” strikes since April, raising concerns about vital energy infrastructure being targeted.
Despite the geopolitical upheavals, Brent has fallen by 18 per cent since reaching a six-month high of $91.17 a barrel on April 5. It is down just more than 4 per cent since the beginning of the year.
A month-long disruption to Libyan oil production, caused by a political crisis, halved the country's output but had minimal impact on oil prices, with Brent crude dropping 3 per cent during the shutdown from late August to early October.
Demand uncertainty
Analysts and economists attribute the lack of market reaction to two main factors: weakening Chinese demand and ample spare capacity among Opec+ nations, who are responsible for roughly 40 per cent of the world's crude production.
For world oil consumption to continue to grow at the historical one-plus million bpd per year rate, other countries/regions such as Africa, India, and South-east Asia will have to achieve nearly all these gains.
Centre on Global Energy Policy at Columbia University
“Strong supply levels and weakening demand, particularly from China, have kept prices in check, amid shifting market assessments of the risk to oil infrastructure in the Middle East,” the World Bank said in a report this month.
China, the main engine of global crude demand over the past two decades, is facing an economic slowdown, driven by a property market downturn, weak consumer spending and a decline in manufacturing.
China's crude oil imports in October totalled 44.7 million tonnes, marking a 2 per cent decline from September and a 9 per cent decrease year-over-year, according to Chinese customs data.
The International Energy Agency expects China's oil demand growth to slow to 140,000 barrels per day this year, a tenth of last year's 1.4 million bpd increase, contributing to a 1 million bpd global supply surplus in 2025.
The agency has said that China's petrol demand will peak this year, followed by diesel demand peaking next year, as electric vehicle adoption grows at a rapid pace in the world’s second-largest economy.
In the first nine months of 2024, new energy vehicles (NEVs), comprising electric, plug-in hybrid, and fuel cell vehicles, represented nearly 39 per cent of new car sales, up from 31.6 per cent in the entire previous year, the South China Morning Post reported.
“The slowdown ahead has implications for the oil market and oil prices,” academics from the Centre on Global Energy Policy at Columbia University said in a report last week.
“For world oil consumption to continue to grow at the historical one-plus million bpd per year rate, other countries/regions such as Africa, India, and South-east Asia will have to achieve nearly all these gains,” they said.
Spare capacity
The Opec+ alliance, which includes Saudi Arabia and Russia, has about 6 million bpd of spare capacity to offset any potential supply disruptions, preventing oil prices from surging.
The downside risks to oil prices have built this year as demand growth has disappointed, non-Opec+ supply has gained, and the alliance has relied on Saudi Arabia-led “voluntary cuts” to keep the market in-check, Ehsan Khoman, MUFG's head of commodities, ESG and emerging markets research, said in a research note.
“Beyond the tepid cyclical nature of the market, the build-up in substantial Opec+ spare capacity is reinforcing the ceiling for sustainable price gains,” Mr Khoman said.
“This creates conditions where prices are likely to soften into next year, particularly with Opec+ looking set to lift production in a bid to regain market share.”
The group, which currently has supply curbs of 5.86 million bpd in place, plans to unwind voluntary output cuts of 2.2 million bpd starting from January next year.
Opec's spare oil production capacity will increase to 8 million bpd by 2030 on planned capacity additions by member countries, according to the IEA.
Major oil price shocks
Arab oil embargo
During the 1973 Arab Israeli War, Opec’s Arab members imposed an oil embargo on the US and other nations that supported Israel in response to American resupply of the Israeli military. The resulting production cuts nearly quadrupled the price of oil from $2.90 a barrel before the embargo to $11.65 a barrel in January 1974.
Iran-Iraq war
The 1979 Iranian Revolution and the 1980 Iran-Iraq War significantly increased global oil prices, rising from $14.95 in 1978 to $37.42 per barrel two years later.
Gulf war
In August 1990, Iraq's invasion of Kuwait caused a sharp increase in oil prices, pushing them from around $65 to over $90 per barrel. However, after a US-led coalition's victory in early 1991, oil prices dropped to around $44 per barrel.
Asian financial crisis
The crisis, which began in Thailand in 1997 and spread across the region, led to severe economic downturns in affected countries. These countries experienced high unemployment rates, poverty, and social unrest. Oil prices plummeted from an average of $17 per barrel in late 1997 to a low of more than $10 per barrel.
9/11 attacks
Following the terrorist attack on US business and military centres on September 11, 2001, Brent prices rose by 5 per cent. However, within two weeks, prices fell by about 25 per cent due to concerns over declining oil demand.
Great recession
The 2008 financial crisis and the subsequent Great Recession severely impacted the oil and gas industry, leading to a sharp drop in oil and gas prices and a credit crunch. Oil prices fell from a high of $133.88 in June 2008 to a low of $39.09 in February 2009.
Oil glut
Oil prices plummeted by more than 70 per cent between mid-2014 and early 2016, largely driven by increased US shale oil production and improved efficiency within the sector. This resulted in the US becoming a major player in the global oil market.
Covid-19 pandemic
The Covid-19 pandemic caused oil prices to plummet due to decreased global demand from lockdowns and economic restrictions, leading to a surplus of oil in the market. In April 2020, West Texas Intermediate futures, the US crude benchmark, fell below zero for the first time since trading began in 1983.
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The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
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Need to know
When: October 17 until November 10
Cost: Entry is free but some events require prior registration
Where: Various locations including National Theatre (Abu Dhabi), Abu Dhabi Cultural Center, Zayed University Promenade, Beach Rotana (Abu Dhabi), Vox Cinemas at Yas Mall, Sharjah Youth Center
What: The Korea Festival will feature art exhibitions, a B-boy dance show, a mini K-pop concert, traditional dance and music performances, food tastings, a beauty seminar, and more.
For more information: www.koreafestivaluae.com
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%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Revibe%20%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Hamza%20Iraqui%20and%20Abdessamad%20Ben%20Zakour%20%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Refurbished%20electronics%20%0D%3Cbr%3E%3Cstrong%3EFunds%20raised%20so%20far%3A%3C%2Fstrong%3E%20%2410m%20%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFlat6Labs%2C%20Resonance%20and%20various%20others%0D%3C%2Fp%3E%0A
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Results
- Brock Lesnar retained the WWE Universal title against Roman Reigns
- Braun Strowman and Nicolas won the Raw Tag Team titles against Sheamus and Cesaro
- AJ Styles retained the WWE World Heavyweight title against Shinsuke Nakamura
- Nia Jax won the Raw Women’s title against Alexa Bliss
- Daniel Bryan and Shane McMahon beat Kevin Owens and Sami Zayn
- The Undertaker beat John Cena
- The Bludgeon Brothers won the SmackDown Tag Team titles against the Usos and New Day
- Ronda Rousey and Kurt Angle beat Triple H and Stephanie McMahon
- Jinder Mahal won the United States title against Randy Orton, Rusev and Bobby Roode
- Charlotte retained the SmackDown Women’s title against Asuka
- Seth Rollins won the Intercontinental title against The Miz and Finn Balor
- Naomi won the first WrestleMania Women’s Battle Royal
- Cedric Alexander won the vacant Cruiserweight title against Mustafa Ali
- Matt Hardy won the Andre the Giant Battle Royal
Zayed Sustainability Prize
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The biog
Hometown: Birchgrove, Sydney Australia
Age: 59
Favourite TV series: Outlander Netflix series
Favourite place in the UAE: Sheikh Zayed Grand Mosque / desert / Louvre Abu Dhabi
Favourite book: Father of our Nation: Collected Quotes of Sheikh Zayed bin Sultan Al Nahyan
Thing you will miss most about the UAE: My friends and family, Formula 1, having Friday's off, desert adventures, and Arabic culture and people
Story%20behind%20the%20UAE%20flag
%3Cp%3EThe%20UAE%20flag%20was%20first%20unveiled%20on%20December%202%2C%201971%2C%20the%20day%20the%20UAE%20was%20formed.%C2%A0%3C%2Fp%3E%0A%3Cp%3EIt%20was%20designed%20by%20Abdullah%20Mohammed%20Al%20Maainah%2C%2019%2C%20an%20Emirati%20from%20Abu%20Dhabi.%C2%A0%3C%2Fp%3E%0A%3Cp%3EMr%20Al%20Maainah%20said%20in%20an%20interview%20with%20%3Cem%3EThe%20National%3C%2Fem%3E%20in%202011%20he%20chose%20the%20colours%20for%20local%20reasons.%C2%A0%3C%2Fp%3E%0A%3Cp%3EThe%20black%20represents%20the%20oil%20riches%20that%20transformed%20the%20UAE%2C%20green%20stands%20for%20fertility%20and%20the%20red%20and%20white%20colours%20were%20drawn%20from%20those%20found%20in%20existing%20emirate%20flags.%3C%2Fp%3E%0A
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Sarfira
Director: Sudha Kongara Prasad
Starring: Akshay Kumar, Radhika Madan, Paresh Rawal
Rating: 2/5
Biography
Favourite Meal: Chicken Caesar salad
Hobbies: Travelling, going to the gym
Inspiration: Father, who was a captain in the UAE army
Favourite read: Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter
Favourite film: The Founder, about the establishment of McDonald's
Company%20profile
%3Cp%3EDate%20started%3A%20January%202022%3Cbr%3EFounders%3A%20Omar%20Abu%20Innab%2C%20Silvia%20Eldawi%2C%20Walid%20Shihabi%3Cbr%3EBased%3A%20Dubai%3Cbr%3ESector%3A%20PropTech%20%2F%20investment%3Cbr%3EEmployees%3A%2040%3Cbr%3EStage%3A%20Seed%3Cbr%3EInvestors%3A%20Multiple%3C%2Fp%3E%0A
The biog
Born: Kuwait in 1986
Family: She is the youngest of seven siblings
Time in the UAE: 10 years
Hobbies: audiobooks and fitness: she works out every day, enjoying kickboxing and basketball
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Day 2, Abu Dhabi Test: At a glance
Moment of the day Dinesh Chandimal has inherited a challenging job, after being made Sri Lanka’s Test captain. He responded in perfect fashion, with an easy-natured century against Pakistan. He brought up three figures with a majestic cover drive, which he just stood and admired.
Stat of the day – 33 It took 33 balls for Dilruwan Perera to get off the mark. His time on zero was eventful enough. The Sri Lankan No 7 was given out LBW twice, but managed to have both decisions overturned on review. The TV replays showed both times that he had inside edged the ball onto his pad.
The verdict In the two previous times these two sides have met in Abu Dhabi, the Tests have been drawn. The docile nature of proceedings so far makes that the likely outcome again this time, but both sides will be harbouring thoughts that they can force their way into a winning position.
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%3Cp%3ENon-oil%20trade%20between%20the%20UAE%20and%20Japan%20grew%20by%2034%20per%20cent%20over%20the%20past%20two%20years%2C%20according%20to%20data%20from%20the%20Federal%20Competitiveness%20and%20Statistics%20Centre.%C2%A0%3C%2Fp%3E%0A%3Cp%3EIn%2010%20years%2C%20it%20has%20reached%20a%20total%20of%20Dh524.4%20billion.%C2%A0%3C%2Fp%3E%0A%3Cp%3ECars%20topped%20the%20list%20of%20the%20top%20five%20commodities%20re-exported%20to%20Japan%20in%202022%2C%20with%20a%20value%20of%20Dh1.3%20billion.%C2%A0%3C%2Fp%3E%0A%3Cp%3EJewellery%20and%20ornaments%20amounted%20to%20Dh150%20million%20while%20precious%20metal%20scraps%20amounted%20to%20Dh105%20million.%C2%A0%3C%2Fp%3E%0A%3Cp%3ERaw%20aluminium%20was%20ranked%20first%20among%20the%20top%20five%20commodities%20exported%20to%20Japan.%C2%A0%3C%2Fp%3E%0A%3Cp%3ETop%20of%20the%20list%20of%20commodities%20imported%20from%20Japan%20in%202022%20was%20cars%2C%20with%20a%20value%20of%20Dh20.08%20billion.%3C%2Fp%3E%0A
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From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
New schools in Dubai
Three ways to boost your credit score
Marwan Lutfi says the core fundamentals that drive better payment behaviour and can improve your credit score are:
1. Make sure you make your payments on time;
2. Limit the number of products you borrow on: the more loans and credit cards you have, the more it will affect your credit score;
3. Don't max out all your debts: how much you maximise those credit facilities will have an impact. If you have five credit cards and utilise 90 per cent of that credit, it will negatively affect your score.
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
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'Top Gun: Maverick'
Rating: 4/5
Directed by: Joseph Kosinski
Starring: Tom Cruise, Val Kilmer, Jennifer Connelly, Jon Hamm, Miles Teller, Glen Powell, Ed Harris
How it works
1) The liquid nanoclay is a mixture of water and clay that aims to convert desert land to fertile ground
2) Instead of water draining straight through the sand, it apparently helps the soil retain water
3) One application is said to last five years
4) The cost of treatment per hectare (2.4 acres) of desert varies from $7,000 to $10,000 per hectare
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How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
If you go
The flights
Emirates and Etihad fly direct to Nairobi, with fares starting from Dh1,695. The resort can be reached from Nairobi via a 35-minute flight from Wilson Airport or Jomo Kenyatta International Airport, or by road, which takes at least three hours.
The rooms
Rooms at Fairmont Mount Kenya range from Dh1,870 per night for a deluxe room to Dh11,000 per night for the William Holden Cottage.
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
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Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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Family reunited
Nazanin Zaghari-Ratcliffe was born and raised in Tehran and studied English literature before working as a translator in the relief effort for the Japanese International Co-operation Agency in 2003.
She moved to the International Federation of Red Cross and Red Crescent Societies before moving to the World Health Organisation as a communications officer.
She came to the UK in 2007 after securing a scholarship at London Metropolitan University to study a master's in communication management and met her future husband through mutual friends a month later.
The couple were married in August 2009 in Winchester and their daughter was born in June 2014.
She was held in her native country a year later.
