Euro-zone turmoil and concerns over Iran sanctions force crude prices down to their lowest levels since the aftermath of the global financial crisis, writes Robin Mills.
As if in a rerun of ancient history, the oil markets are trapped between Greece and Iran. Tehran was on top earlier in the year; now Athens is striking back. But this is a contest of weakness, not of strength.
Traders are balancing two competing problems. From January onwards, worries intensified over sanctions on Iran, imposed because of concerns that the country has a nuclear-weapons programme.
There were fears that a confrontation might block the Strait of Hormuz, the conduit for a fifth of global oil supplies, or that an American or Israeli strike on Iran could precipitate a wider conflict.
A ban on Iranian oil exports to the European Union comes into force on July 1, but many European customers have already halted purchases. The United States has pressured other countries, including South Korea, Japan, India, Turkey and South Africa, to cut oil purchases from Iran. And sanctions on insurance companies providing coverage for tankers carrying Iranian oil have made it hard for the country to ship its crude.
Iran's exports fell from about 2.2 million to 2.3 million barrels per day last year and to 1.5 million bpd this April. As much as 36 million barrels may be floating unsold in tankers in the Gulf.
In March, Brent oil prices reached US$128 per barrel, the highest since the global financial crisis and exceeding even the levels during last year's overthrow of Libya's Muammar Qaddafi.
But last month, worries over Greece and the euro zone struck back, with the downgrading of Spain's credit rating.
The Chinese slowdown continued, with growth falling below 8 per cent for the first time since 2009, while South Korea's exports fell for the fourth straight month, and India's growth was at its weakest in nine years. Dialogue in Baghdad between the West and Iran, although inconclusive, nevertheless helped to ease traders' immediate concerns.
Accordingly, May was the worst month for oil prices since the 2008-2009 global financial crisis.
On Friday, Brent crude oil dropped below $100 for the first time in eight months.
Yet there is a third, more powerful antagonist in this struggle - one unknown to Xerxes of Persia or to Alexander the Great.
Saudi Arabia has increased its production to a 30-year high, and has been joined in this by its Gulf allies Kuwait and the UAE.
Libyan output has all but recovered from the country's civil war. Most significant for the longer term, foreign investment in Iraq is at last showing results, and its production now almost matches Iran's; its exports are already above its neighbour's.
Despite a slight dip last month from April, overall Opec production is 2.44 million bpd above its own estimates of demand, and so stocks are accumulating and driving down prices. US inventories have reached their highest level since 1990.
Not surprisingly, the falling oil price worries Gulf markets, with the Saudi stock exchange dropping 4.2 per cent on Saturday.
The IMF estimates Riyadh requires $80 per barrel to balance its budget, with Iran, Iraq and the UAE needing even more. By next year, the Saudi budget could be in deficit.
In view of their own fiscal challenges, why are the Saudis pursuing this policy?
They have two motivations. The first is to ease global economic worries, and to try to avoid a rerun of the Lehman Brothers crisis in September 2008, triggered, for instance, by a Greek exit from the euro. During the onset of the financial crisis, oil prices plummeted from $147 per barrel to $37.
The problem here is that, while Saudi Arabia can help to ease the burden of high oil prices on the global economy, it is up to the Europeans to sort out Greece. And, by accumulating large inventories, the stage has been set for prices to heavily undershoot the $100 target price of the Saudi oil minister, Ali Al Naimi.
The second Saudi aim is to weaken Iran. Lower oil prices starve Tehran of cash, while Riyadh is happy to replace its adversary's lost exports. Saudi Arabia has much larger financial reserves than Iran to see out a period of weak prices.
Accumulating large stocks of crude at various strategic locations, including Texas, Egypt and Japan, is insurance against a conflict that could disrupt oil supplies. However, should a compromise be reached over Iran's nuclear activities, an easing of sanctions would relieve oil buyers and release a flood of unsold oil.
For the time being, the Saudis have the upper hand. But it is almost guaranteed that the balance will swing too far from the desired equilibrium - more probably to lower oil prices, and difficult economic choices for the Gulf.
Robin Mills is the head of consulting at Manaar Energy and the author of The Myth of the Oil Crisis and Capturing Carbon
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The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
If you go
Flight connections to Ulaanbaatar are available through a variety of hubs, including Seoul and Beijing, with airlines including Mongolian Airlines and Korean Air. While some nationalities, such as Americans, don’t need a tourist visa for Mongolia, others, including UAE citizens, can obtain a visa on arrival, while others including UK citizens, need to obtain a visa in advance. Contact the Mongolian Embassy in the UAE for more information.
Nomadic Road offers expedition-style trips to Mongolia in January and August, and other destinations during most other months. Its nine-day August 2020 Mongolia trip will cost from $5,250 per person based on two sharing, including airport transfers, two nights’ hotel accommodation in Ulaanbaatar, vehicle rental, fuel, third party vehicle liability insurance, the services of a guide and support team, accommodation, food and entrance fees; nomadicroad.com
A fully guided three-day, two-night itinerary at Three Camel Lodge costs from $2,420 per person based on two sharing, including airport transfers, accommodation, meals and excursions including the Yol Valley and Flaming Cliffs. A return internal flight from Ulaanbaatar to Dalanzadgad costs $300 per person and the flight takes 90 minutes each way; threecamellodge.com
MATCH INFO
Fixture: Thailand v UAE, Tuesday, 4pm (UAE)
TV: Abu Dhabi Sports
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
The schedule
December 5 - 23: Shooting competition, Al Dhafra Shooting Club
December 9 - 24: Handicrafts competition, from 4pm until 10pm, Heritage Souq
December 11 - 20: Dates competition, from 4pm
December 12 - 20: Sour milk competition
December 13: Falcon beauty competition
December 14 and 20: Saluki races
December 15: Arabian horse races, from 4pm
December 16 - 19: Falconry competition
December 18: Camel milk competition, from 7.30 - 9.30 am
December 20 and 21: Sheep beauty competition, from 10am
December 22: The best herd of 30 camels
UAE currency: the story behind the money in your pockets
'Gold'
Director:Anthony Hayes
Stars:Zaf Efron, Anthony Hayes
Rating:3/5
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
What is hepatitis?
Hepatitis is an inflammation of the liver, which can lead to fibrosis (scarring), cirrhosis or liver cancer.
There are 5 main hepatitis viruses, referred to as types A, B, C, D and E.
Hepatitis C is mostly transmitted through exposure to infective blood. This can occur through blood transfusions, contaminated injections during medical procedures, and through injecting drugs. Sexual transmission is also possible, but is much less common.
People infected with hepatitis C experience few or no symptoms, meaning they can live with the virus for years without being diagnosed. This delay in treatment can increase the risk of significant liver damage.
There are an estimated 170 million carriers of Hepatitis C around the world.
The virus causes approximately 399,000 fatalities each year worldwide, according to WHO.
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%3A%20%3C%2Fstrong%3EEducatly%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2020%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EUAE%3Cbr%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EMohmmed%20El%20Sonbaty%2C%20Joan%20Manuel%20and%20Abdelrahman%20Ayman%3Cbr%3E%3Cstrong%3EIndustry%3A%20%3C%2Fstrong%3EEducation%20technology%3Cbr%3E%3Cstrong%3EFunding%20size%3A%20%3C%2Fstrong%3E%242%20million%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EEnterprise%20Ireland%2C%20Egypt%20venture%2C%20Plus%20VC%2C%20HBAN%2C%20Falak%20Startups%3C%2Fp%3E%0A
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
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
Tottenham's 10 biggest transfers (according to transfermarkt.com):
1). Moussa Sissokho - Newcastle United - £30 million (Dh143m): Flop
2). Roberto Soldado - Valencia - £25m: Flop
3). Erik Lamela - Roma - £25m: Jury still out
4). Son Heung-min - Bayer Leverkusen - £25m: Success
5). Darren Bent - Charlton Athletic - £21m: Flop
6). Vincent Janssen - AZ Alkmaar - £18m: Flop
7). David Bentley - Blackburn Rovers - £18m: Flop
8). Luka Modric - Dynamo Zagreb - £17m: Success
9). Paulinho - Corinthians - £16m: Flop
10). Mousa Dembele - Fulham - £16m: Success
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
UAE currency: the story behind the money in your pockets
Hotel Silence
Auður Ava Ólafsdóttir
Pushkin Press
