Oil prices posted a drop this week, the first this year, following US President Donald Trump's remarks on Thursday asking Opec to bring down the cost of crude.
Concerns about Mr Trump’s trade policies and proposed tariffs on China, the world’s leading oil importer, are also weighing on prices.
Brent, the benchmark for two thirds of the world’s oil, settled up 0.27 per cent to $78.50 a barrel. West Texas Intermediate, the gauge that tracks US crude, settled up 0.05 per cent to $74.66.
Brent has lost 2.8 per cent this week, while WTI was down 4.1 per cent.
“From the campaign, we knew that Donald Trump wanted lower oil prices to fight US inflation, but so far, his focus was on rising US crude production. Now, he asks Opec to help him. Also, if prices would fall from current levels, that would, in my view, not really support stronger US production growth,” Giovanni Staunovo, strategist at UBS, told The National.
“Opec+ target is and remains to keep the oil market in balance. So, supply additions would require lower non-Opec+ supply growth and/or supply disruptions.”
Mr Trump said in his virtual address to the World Economic Forum in Davos on Thursday that if oil prices came down, the Russia-Ukraine war would “end immediately”.
“Right now, the price is high enough that that war will continue. You've got to bring down the oil price,” he said.
Two weeks ago, the US and UK toughened sanctions on Russia’s energy industry, intensifying pressure on Moscow as the war in Ukraine nears its fourth year. The new measures, designed to hit Moscow's energy revenue that is fuelling its war machine, targets individuals and Russian entities, including Gazprom Neft and Surgutneftegas, both major players in the Russian oil industry.
“WTI and Brent crude oil prices have spent the past week drifting lower following a very strong start to the year that saw prices gain more than $10 on a combination of an exceptional cold winter temporarily lifting demand for heating fuels and diesel and, not least, the latest rounds of US sanctions on Russia’s oil industry, which went much further than expected,” said Ole Hansen, head of commodity strategy at Saxo Bank.
However, after a strong start, “the mood among crude oil traders has in the past few days shifted back to one of caution, with the focus now squarely on Washington and the increased uncertainty caused by a wave of Trump announcements following his inauguration”, he added.
Traders have also been keeping a close eye on what polices the Trump administration will institute in relation to Iran and trade. During his previous term in the White House, Mr Trump exerted maximum pressure on Iran to limit its energy exports.
“Against market expectations, global oil inventories have continued to decline amid strong compliance by Opec+ producers to the agreed quotas. Trump, meanwhile, has added to the supply-side risks with his desire to apply ‘maximum pressure’ to Iran while potentially cutting imports from Venezuela,” Mr Staunovo said.
He added that risks to oil prices remain skewed to the upside in the short term.
“US crude production stands at a record level, but the growth rate has slowed down in recent years. We expect modest US crude supply growth in 2025, as current prices don’t incentivise drilling more despite Trump’s ‘drill baby, drill’ mantra. Oil demand should grow in line with the long-term growth rate of 1.2 million barrels per day, with the oil market almost balanced this year,” Mr Staunovo said.
Mr Trump’s expectations of convincing the Opec to increase output needs to be made a reality for oil prices to significantly decline, said Vijay Valecha, chief investment officer at Century Financial.
"Maintaining the right price balance would be crucial even for his vision of increased US oil productions, as falling oil prices could act as an obstacle for domestic producers as well," he told The National.
"A way for the group to maintain balance could be gradually increasing production, lower than what was initially planned, while maintaining the right supply-demand dynamics."
Teams
Pakistan: Sarfraz Ahmed (captain), Mohammad Hafeez, Sahibzada Farhan, Babar Azam, Shoaib Malik, Asif Ali, Shadab Khan, Shaheen Shah Afridi, Usman Khan Shanwari, Hasan Ali, Imad Wasim, Faheem Ashraf.
New Zealand: Kane Williamson (captain), Corey Anderson, Mark Chapman, Lockie Ferguson, Colin de Grandhomme, Adam Milne, Colin Munro, Ajaz Patel, Glenn Phillips, Seth Rance, Tim Seifert, Ish Sodhi, Tim Southee, Ross Taylor.
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Financial considerations before buying a property
Buyers should try to pay as much in cash as possible for a property, limiting the mortgage value to as little as they can afford. This means they not only pay less in interest but their monthly costs are also reduced. Ideally, the monthly mortgage payment should not exceed 20 per cent of the purchaser’s total household income, says Carol Glynn, founder of Conscious Finance Coaching.
“If it’s a rental property, plan for the property to have periods when it does not have a tenant. Ensure you have enough cash set aside to pay the mortgage and other costs during these periods, ideally at least six months,” she says.
Also, shop around for the best mortgage interest rate. Understand the terms and conditions, especially what happens after any introductory periods, Ms Glynn adds.
Using a good mortgage broker is worth the investment to obtain the best rate available for a buyer’s needs and circumstances. A good mortgage broker will help the buyer understand the terms and conditions of the mortgage and make the purchasing process efficient and easier.
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Director: Christopher McQuarrie
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Prop idols
Girls full-contact rugby may be in its infancy in the Middle East, but there are already a number of role models for players to look up to.
Sophie Shams (Dubai Exiles mini, England sevens international)
An Emirati student who is blazing a trail in rugby. She first learnt the game at Dubai Exiles and captained her JESS Primary school team. After going to study geophysics at university in the UK, she scored a sensational try in a cup final at Twickenham. She has played for England sevens, and is now contracted to top Premiership club Saracens.
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Seren Gough-Walters (Sharjah Wanderers mini, Wales rugby league international)
Few players anywhere will have taken a more circuitous route to playing rugby on Sky Sports. Gough-Walters was born in Al Wasl Hospital in Dubai, raised in Sharjah, did not take up rugby seriously till she was 15, has a master’s in global governance and ethics, and once worked as an immigration officer at the British Embassy in Abu Dhabi. In the summer of 2021 she played for Wales against England in rugby league, in a match that was broadcast live on TV.
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Erin King (Dubai Hurricanes mini, Ireland sevens international)
Aged five, Australia-born King went to Dubai Hurricanes training at The Sevens with her brothers. She immediately struck up a deep affection for rugby. She returned to the city at the end of last year to play at the Dubai Rugby Sevens in the colours of Ireland in the Women’s World Series tournament on Pitch 1.
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COMPANY PROFILE
Company name: SimpliFi
Started: August 2021
Founder: Ali Sattar
Based: UAE
Industry: Finance, technology
Investors: 4DX, Rally Cap, Raed, Global Founders, Sukna and individuals
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
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WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
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The burning issue
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.
Read part four: an affection for classic cars lives on
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Read part one: how cars came to the UAE
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The%20specs
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THE SPECS
Engine: 3.5-litre supercharged V6
Power: 416hp at 7,000rpm
Torque: 410Nm at 3,500rpm
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Fuel consumption: 10.2 l/100km
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The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
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