Geopolitical risks to energy markets used to emanate mainly from Moscow, Baghdad, Tehran or Caracas. The latest upheaval in the US administration, with Rex Tillerson’s departure as Secretary of State, threatens to add Washington to that list of capitals. And major energy producers are in the firing line.
The State Department’s new head Mike Pompeo, previously of the CIA, has, like Donald Trump, been notably hostile towards the Iran nuclear deal, and conspiratorial on Russia. Rumours continue to swirl over the possible replacement of National Security Advisor H.R. McMaster, potentially by the uber-hawkish John Bolton, a prominent promoter of the 2003 invasion of Iraq.
Mr Tillerson’s tenure as Secretary of State was an odd contrast to his time at ExxonMobil. Cocooned in the “God pod” at the oil company’s headquarters outside Dallas, its senior executives can sometimes be aloof. His ability to manage a large organisation should not have been in doubt, but he leaves behind a legacy of organisational chaos, downsizing and plummeting morale at the State Department.
But while he made some major strategic missteps as ExxonMobil’s chief executive – in Russia, Iraq and buying the US shale company XTO – his attempted policies as Secretary of State were, in comparison, generally sound and conventional. Mr Pompeo promises a much more volatile ride.
There are four clear global trouble spots which might significantly affect oil and gas markets, and will test the mettle of Mr Pompeo.
First up, Venezuela’s slow-motion collapse is now accelerating, with production down more than 50,000 barrels per day from January to February, according to independent observers. Tougher sanctions on Caracas to prevent it sending crude to the US, the refinancing of its debts, or a renewed push for a change of government could cut current exports of crude from about 1 million barrels per day to near-zero.
Russia and China, which have lent the Maduro regime huge sums, may then get involved in a phenomenally messy default, while attempting to preserve a foothold in the western hemisphere.
Second, Russia itself is still under western sanctions that hamper its development of Arctic and shale resources. After Mr Tillerson’s condemnation of Russia’s alleged chemical weapons attack in the UK, the White House’s support for its British ally has been muddled. Disputes over Ukrainian gas transit add further risk.
Thirdly, a Russian state company, Zarubezhneft, has just signed the second post-sanctions petroleum development contract with Iran, after July’s agreement with Total of France and the China National Petroleum Corporation.
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Meanwhile, European attempts to find an acceptable “fix” for Iran’s nuclear deal seem doomed. New proposals from the deal’s opponents are clearly intended to be an ultimatum beyond anything Iran could accept, especially as Tehran feels it is already not receiving the promised economic benefits from the 2015 accord.
Despite suggestions that reimposed US sanctions could again cut Iranian oil exports by 1 million barrels per day, the actual immediate impact is likely to be minimal. The EU, and even more China and Russia, the other deal signatories, still consider Iran to be in compliance, and will try to shield their companies from American interference.
Nevertheless, future investment in the Iranian energy sector would be severely constrained. More seriously, Messrs Pompeo and Bolton might push for a military end to Iran’s nuclear activities, which could suck in neighbouring petroleum producers and lead to unpredictable wider damage.
The final venue of threat, North Korea, again draws in China and to an extent Russia in opposition to the US. Not a notable energy consumer or producer itself, Pyongyang’s nuclear weapons raise the spectre of a wider conflict that could devastate South Korea, draw in Japan and disrupt oil and gas transit and demand across north-east Asia.
Even if Mr Trump’s reshaped team identifies the right policies, it is doubtful that the State Department’s eviscerated diplomatic corps can deliver the complex manoeuvres required for a deal in Korea, a consensus with the Europeans on a modified Iran deal, a Latin American push for peaceful political change in Venezuela, or a united western front against Russia.
But energy producers and investors should not treat the Washington reshuffle as a one-way ticket to higher revenues. A loss of Venezuelan or Iranian oil exports would presumably be made up by spare capacity from other Opec producers, who would suspend or greatly revise the ongoing production cut agreement. A sharp spike in prices followed by a global recession would be inadvisable. Similarly, a west-Russia showdown would cast doubt on Moscow’s continuing adherence to its pact with Opec.
The critical mass of great power rivalry, massive conventional arms and nuclear weapons makes the Korean situation the most critical. It may be far from the Arabian Gulf, but even a contained conflict here would severely hit demand for oil and, even more, liquefied natural gas.
While our eyes are on the obvious hotspots, it is possible the next shock may emerge from an entirely unexpected area – a tariff-triggered trade war, China, a new economic crisis, a massive cyberattack - testing an understaffed and chaotic US administration. With old alliances under strain and new ones nascent or paradoxical, energy producers are set for another testing year.
Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis
UAE currency: the story behind the money in your pockets
THE RESULTS
5pm: Maiden (PA) Dh80,000 1,400m
Winner: Alnawar, Connor Beasley (jockey), Helal Al Alawi (trainer)
5.30pm: Maiden (PA) Dh80,000 1,400m
Winner: Raniah, Noel Garbutt, Ernst Oertel
6pm: Handicap (PA) Dh90,000 2,200m
Winner: Saarookh, Richard Mullen, Ana Mendez
6.30pm: Sheikh Zayed bin Sultan Al Nahyan Jewel Crown (PA) Rated Conditions Dh125,000 1,600m
Winner: RB Torch, Tadhg O’Shea, Eric Lemartinel
7pm: Al Wathba Stallions Cup Handicap Dh70,000 1,600m
Winner: MH Wari, Antonio Fresu, Elise Jeane
7.30pm: Handicap Dh90,000 1,600m
Winner: Mailshot, Royston Ffrench, Salem bin Ghadayer
Where to buy
Limited-edition art prints of The Sofa Series: Sultani can be acquired from Reem El Mutwalli at www.reemelmutwalli.com
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
more from Janine di Giovanni
The Limehouse Golem
Director: Juan Carlos Medina
Cast: Olivia Cooke, Bill Nighy, Douglas Booth
Three stars
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Engine: 3.5-litre V6
Transmission: eight-speed automatic
Power: 290hp
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On sale: now
TV: World Cup Qualifier 2018 matches will be aired on on OSN Sports HD Cricket channel
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
MATCH INFO
Borussia Dortmund 0
Bayern Munich 1 (Kimmich 43')
Man of the match: Joshua Kimmich (Bayern Munich)
HOW TO WATCH
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The Bio
Favourite place in UAE: Al Rams pearling village
What one book should everyone read: Any book written before electricity was invented. When a writer willingly worked under candlelight, you know he/she had a real passion for their craft
Your favourite type of pearl: All of them. No pearl looks the same and each carries its own unique characteristics, like humans
Best time to swim in the sea: When there is enough light to see beneath the surface
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
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
FIGHT CARD
1. Featherweight 66kg
Ben Lucas (AUS) v Ibrahim Kendil (EGY)
2. Lightweight 70kg
Mohammed Kareem Aljnan (SYR) v Alphonse Besala (CMR)
3. Welterweight 77kg
Marcos Costa (BRA) v Abdelhakim Wahid (MAR)
4. Lightweight 70kg
Omar Ramadan (EGY) v Abdimitalipov Atabek (KGZ)
5. Featherweight 66kg
Ahmed Al Darmaki (UAE) v Kagimu Kigga (UGA)
6. Catchweight 85kg
Ibrahim El Sawi (EGY) v Iuri Fraga (BRA)
7. Featherweight 66kg
Yousef Al Husani (UAE) v Mohamed Allam (EGY)
8. Catchweight 73kg
Mostafa Radi (PAL) v Abdipatta Abdizhali (KGZ)
9. Featherweight 66kg
Jaures Dea (CMR) v Andre Pinheiro (BRA)
10. Catchweight 90kg
Tarek Suleiman (SYR) v Juscelino Ferreira (BRA)
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
The years Ramadan fell in May
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
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The specs: Macan Turbo
Engine: Dual synchronous electric motors
Power: 639hp
Torque: 1,130Nm
Transmission: Single-speed automatic
Touring range: 591km
Price: From Dh412,500
On sale: Deliveries start in October
'Nightmare Alley'
Director:Guillermo del Toro
Stars:Bradley Cooper, Cate Blanchett, Rooney Mara
Rating: 3/5
EA Sports FC 25
Developer: EA Vancouver, EA Romania
Publisher: EA Sports
Consoles: Nintendo Switch, PlayStation 4&5, Xbox One and Xbox Series X/S
Rating: 3.5/5
MATCH DETAILS
Manchester United 3
Greenwood (21), Martial (33), Rashford (49)
Partizan Belgrade 0
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
THREE
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THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
