Opec strategy pays off

10 January, 2018 | By RICHARD THOMPSON

A series of events in the final weeks of 2017 provide a strong indication of what we can expect in the year ahead.

From an economic perspective, the most significant was the 30 November agreement between Opec and non-Opec oil producers to extend the oil production cap to the end of 2018. The move aims to rebalance global oil supply and demand, and remove damaging volatility in the energy markets.

The strategy is working. Oil prices are climbing and the improved outlook gives a degree of fiscal flexibility that will help governments to push ahead with difficult economic reforms.

An initial public offering (IPO) of shares in the fuel distribution arm of Abu Dhabi National Oil Company in December was the first of several listings planned in the region. This will be followed in 2018 by the Saudi Aramco IPO, which could be the biggest share sale in history. These sales pave the way for the more challenging privatisation of the region’s utilities and other state entities.

There is huge investor appetite to buy into the region’s prime assets, and as well as delivering substantial windfalls to governments, the privatisations will have a transformational effect on the region.

Set against this is rising political risk. The ongoing Qatar crisis, the anti-corruption arrests in Saudi Arabia and the missiles fired at the GCC from Yemen, all in December, could undermine investor confidence.

The coming year will continue to deliver shocks. But companies must not lose sight of the powerful, long-term fundamentals driving the region – a fast-growing, young population, an expanding middle class, ambitious and well-funded diversification programmes, and the world’s most abundant energy supplies.

Villas, townhouses drive UAE residential market

Demand for affordable and community-centric homes is driving an uptick in the UAE residential property sector · Changing consumer behaviour such as demand for community-centric, open spaces is steering buyers towards ...

Early contractor input is crucial for successful projects

Engineering Contracting Company’s CEO Kareem Farah says construction companies bring expertise that helps reduce project costs It is becoming increasingly important for developers and contractors to deliver quality projects efficiently as ...

Short Stay Surgical Centre Concept

Short Stay Surgery is defined as the complete resolution of a patient’s management plan within 48 hours of admission. This concept has been around for decades. With the passing of ...

Construction costs are expected to rise in 2019

Costs in Riyadh will increase the most with gains of 5 per cent Construction costs in the Middle East are expected to increase during 2019, according to a report by UK-based ...

Commercial deliberations for renegotiation

A more nuanced and transparent approach to procurement can help clients and contractors negotiate better agreements in the long term This article is extracted from the report 'UAE Construction After Covid-19' Legal ...

Lower oil prices forecast for 2020

Analysts predict rising inventories will weigh on prices The US Energy Information Administration (EIA) is expecting the average price of crude to be lower in 2020 than in 2019 due to ...

Adnoc breaks down $109bn five-year project plan

Abu Dhabi’s Supreme Petroleum Council (SPC) has approved plans by Abu Dhabi National Oil Company (Adnoc) for a capital expenditure of more than AED400bn ($108bn) over the next five years, as it moves to ...

EXCLUSIVE: UAE banks call for clarity on VAT

Lenders want to know how tax will be applied to banking services The UAE’s leading banks are seeking clarification from Abu Dhabi about how value-added tax (VAT) will be applied when ...

Etihad railway to drive logistics growth

Some packages in the next stage of Etihad railway will link the UAE’s major ports The procurement process for the next stage of the UAE’s Etihad railway is now in full swing. Contractors ...

Opec recognises concept of peak oil demand

Amid a decline in global oil demand due to the Covid-19 pandemic, Opec has, for the first time, placed a date on the likely point of peak oil demand On 13 ...