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.

Capital expenditure boosts Egypt’s construction sector

High levels of contract awards over the past few years have allowed Egypt to regain its mantle as a construction market of regional importance, but there are fears the spending ...

BRIEFING PAPER: Securing supply

National targets and government strategies are driving forces to improve food security in the GCC and Egypt Download the latest briefing paper from the MEED Mashreq Services & Manufacturing Partnership Food security ...

Surging demand opens water investment taps

Increased pressure on the supply of water is resulting in a regional shift towards private finance and the separation of water and power generation facilities Securing adequate water supplies is one ...

UAE logistics actively mitigates disruption

The UAE logistics industry is taking on lessons from the pandemic to reshape its business models The logistics and warehousing sectors are an integral part of the business value chain, ...

Debt relief for DXB Entertainments

Payments for AED4.2bn ($1.15bn) facility deferred for 15 months as Legoland Hotel launch is delayed DXB Entertainments, the Dubai Financial Market-listed operator of Dubai Parks and Resorts, has received debt relief ...

Egypt and IMF agree on financial support

Cairo and IMF have agreed to a 12-month stand-by arrangement on a loan valued at $5.2bn Egypt and the Washington-based International Monetary Fund (IMF) have agreed to a 12-month stand-by arrangement ...

Signs of trouble ahead for Dubai’s construction market

Key indicators point to a potential crash looming in Dubai’s projects sector, with significant consequences for the regional market Architects are not prone to fretting, so when one recently described his ...

Saudi Arabia balances economics and safety

Plunging oil prices triggered a SR34.1bn deficit in Saudi Arabia’s first quarter budget The region’s largest economy has the most to gain, or lose, depending on how quickly the Covid-19 pandemic is contained ...

BRIEFING PAPER: The Quest for Gas

Natural gas production maintains steady incline Middle East producers are boosting natural gas output to meet rising energy demand About $33.5bn-worth of gas exploration and production projects are under execution across the ...

UAE leads as global economy restarts

Dubai and Abu Dhabi are taking leading roles as countries start to emerge from lockdowns The second half of 2020 will be crucial for the global economy as countries begin to ...