Opec strategy pays off

Opec

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. 

Related Posts
The Future of Middle East Energy
New downloadable report from MEED, in partnership with Mashreq, examines how the region’s oil producers are responding to changing energy demand. The fundamentals of future energy demand look good for Middle East oil ...
READ MORE
Abu Dhabi considering $20bn investment in offshore sour gas
State oil company targeting five offshore and three onshore fields for high-sulphur gas capacity expansions Abu Dhabi National Oil Company (Adnoc) is considering the investment of $20bn in developing sour gas ...
READ MORE
Disrupting Oil & Gas
  New downloadable report from MEED, in partnership with Mashreq, brings together a series of case studies on the deployment of technology in oil and gas The global oil and gas industry is embracing ...
READ MORE
Abu Dhabi seeking IPO rewards
Stock listing of assets is becoming a preferred fundraising method for Abu Dhabi While Riyadh continues to work out its listing of Saudi Aramco, Abu Dhabi is moving ahead with more initial public ...
READ MORE
Abu Dhabi’s stimulus package to be met by increased oil revenues
The UAE emirate had prepared a budget based on a $50 a-barrel oil price US ratings agency Moody’s Investors Service expects Abu Dhabi’s $13.6bn stimulus package to be fully met by increased oil ...
READ MORE
Energy investment to fall by $400bn
Oil and gas investment to fall by almost a third in 2020 Annual energy investment is set to fall by an historic $400bn in 2020, according to the International Energy Agency’s ...
READ MORE
Adnoc presses ahead with onshore projects
The state energy enterprise has been focusing on upgrading infrastructure at its onshore oil and gas fields this year, as market factors impede progress on cost-intensive projects With timelines extended and ...
READ MORE
Abu Dhabi offers six oil and gas blocks in first ever licensing round
State oil giant Adnoc announces details of four onshore and two offshore blocks in which it will hold majority 60 per cent stake The Abu Dhabi National Oil Company (Adnoc) has ...
READ MORE
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 ...
READ MORE
IMF forecasts 7.1 per cent drop in GCC’s GDP
Economic contraction estimates deepen for 2020, with rebound of 2.1 per cent expected in 2021 The Washington-based IMF has announced further cuts to its outlook for the GCC region, where a GDP ...
READ MORE
The Future of Middle East Energy
Abu Dhabi considering $20bn investment in offshore sour
Disrupting Oil & Gas
Abu Dhabi seeking IPO rewards
Abu Dhabi’s stimulus package to be met by
Energy investment to fall by $400bn
Adnoc presses ahead with onshore projects
Abu Dhabi offers six oil and gas blocks
Lower oil prices forecast for 2020
IMF forecasts 7.1 per cent drop in GCC’s
10 January, 2018 | .By RICHARD THOMPSON