VIENNA // Saudi Arabia, the world's oil superpower, faces a choice this week between indulging Opec price hawks with a cut in production and listening to its customers, who would prefer to see the current slide in prices extend below US$100 a barrel. The pressure on Opec from consuming nations has eased now that prices have fallen by 30 per cent from their record above $147 in July, but the US, Europe and Japan are still teetering on the brink of recession due in part to this year's oil shock.
Opec's price hawks - Venezuela and Iran - have pointed to forecasts of an excess of oil supply next year as a reason for Opec, and particularly Saudi Arabia, to reverse recent increases in exports. But Ali al Naimi, the Saudi Arabian oil minister who holds the key to Opec policy as the world's biggest producer, has kept a guarded silence in the run-up to Tuesday's ministerial meeting in Vienna. For Saudi Arabia and other low cost producers such as the UAE, reducing oil prices is not just about pleasing consumers. With decades of reserves left in the ground and modest budgetary needs, their principal concern is to sustain demand for oil in the long term.
Analysts were divided over which argument would win the day. Dalton Garis, an associate professor of economics and market behaviour at the Petroleum Institute in Abu Dhabi, said Saudi Arabia would enter Tuesday's meeting concerned about the effect that high oil prices were having on the world economy. "They have been on the phone with people around the world who have been giving them an earful," he said.
Oil prices will likely hover between $90 and $110 a barrel without a change in Opec supply, a range reflecting the fact that a "risk premium" had been taken out of the price. With falling demand in the US and increased production capacity, mostly in Saudi Arabia, there is a larger cushion to protect against any disruption. "I think the lightning rods like Iran will say they can cut," he said. "For the larger producers in the southern Gulf, my guess is they won't go for a cut."
But Raad Alkadiri, an analyst at PFC Energy in Washington, said Mr Naimi might favour trimming exports, now that the shock of $150 oil was easing. "There will be a supply overhang in 2009, which they want to avoid," he said. "Opec as an organisation and Mr Naimi in particular have put market fundamentals at the forefront of the decision making process, and they will not want to stray very far from that path."
According to Opec's latest oil market report, demand for its exports next year will be approximately 1.3 million barrels per day below its current production rates. Preliminary inventory data are already indicating a surplus of crude on the market, with commercial oil stocks in the industrialised world increasing by 30 million barrels in July, versus a reduction of 15 million barrels a month before.
The last time Opec ministers met was at the peak of the oil price crisis in June, when King Abdullah of Saudi Arabia personally intervened. He invited the prominent players of the global industry to the Red Sea port of Jeddah and took the lead in answering the pleas of the industrialised world with a big, unilateral increase in exports outside the ambit of Opec. Mr Alkadiri said it might still be too soon for Mr Naimi to publicly reverse that gesture, with oil prices still hovering above $100 a barrel.
New York crude oil futures closed on Friday at $106.23. Most Gulf oil producers can easily balance their budgets at $60 a barrel or below, but there is no consensus within Opec about what the price floor should be. Iran and Venezuela, for example, would begin to feel the pinch below $100, Mr Alkadiri said. In a report last week, Barclays Capital said prices would continue to fall without a strong indication from Opec that it would defend a certain price level with production cuts.
The 13-member group is currently pumping 800,000 barrels per day (bpd) above its formal target of 29.7 million bpd for the 12 members bound by quotas, so any quotas or increased market discipline would be interpreted by traders as an output cut.
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UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The specs
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Libya's Gold
UN Panel of Experts found regime secretly sold a fifth of the country's gold reserves.
The panel’s 2017 report followed a trail to West Africa where large sums of cash and gold were hidden by Abdullah Al Senussi, Qaddafi’s former intelligence chief, in 2011.
Cases filled with cash that was said to amount to $560m in 100 dollar notes, that was kept by a group of Libyans in Ouagadougou, Burkina Faso.
A second stash was said to have been held in Accra, Ghana, inside boxes at the local offices of an international human rights organisation based in France.
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Rating: 4.5/5
Take Me Apart
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Race card:
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Killing of Qassem Suleimani
Mobile phone packages comparison
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Where to donate in the UAE
The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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
What is double taxation?
- Americans living abroad file taxes with the Internal Revenue Service, which can cost hundreds of dollars to complete even though about 60 per cent do not owe taxes, according to the Taxpayer Advocate Service
- Those obligations apply to millions of Americans residing overseas – estimates range from 3.9 million to 5.5 million – including so-called "accidental Americans" who are unaware they hold dual citizenship
- The double taxation policy has been a contentious issue for decades, with many overseas Americans feeling that it punishes them for pursuing opportunities abroad
- Unlike most countries, the US follows a citizenship-based taxation system, meaning that Americans must file taxes annually, even if they do not earn any income in the US.
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Business Insights
- Canada and Mexico are significant energy suppliers to the US, providing the majority of oil and natural gas imports
- The introduction of tariffs could hinder the US's clean energy initiatives by raising input costs for materials like nickel
- US domestic suppliers might benefit from higher prices, but overall oil consumption is expected to decrease due to elevated costs