EN­ERGY MAR­KETS RE­ACT TO ROCKY GEOPOL­I­TICS

Qatar Today - - BUSINESS -

EN­ERGY MAR­KETS AND GEOPOL­I­TICS ARE PER­MA­NENT BED­FEL­LOWS, BUT THE RE­LA­TION­SHIP IS SET TO GET PAR­TIC­U­LARLY TRICKY IN 2016. GULF GOV­ERN­MENTS’ BUD­GETS ARE UN­DER RIS­ING PRES­SURE AS OIL PRICES SINK TO BELOW $30 A BAR­REL (BL) FOR THE FIRST TIME IN 12 YEARS AND RE­LA­TION­SHIPS DARKEN WITHIN OPEC AND WITH NON-OPEC PRO­DUC­ERS.

Nige­ria's oil min­is­ter and 2015 OPEC Pres­i­dent Em­manuel Ibe Kachikwu re­cently hinted at an emer­gency meet­ing in April; a state­ment wel­comed by OPEC's less wealthy mem­bers that have called on OPEC linch­pin Saudi Ara­bia since Novem­ber 2014, to change the group's pol­icy to main­tain mar­ket share. Nige­ria, Al­ge­ria and Venezuela are just a few that are par­tic­u­larly feel­ing the pinch.

But the stale­mate is likely to con­tinue. The UAE En­ergy Min­is­ter Suhail Mo­hamed Al Mazrouei has ques­tioned how an OPEC meet­ing would ad­dress the whole prob­lem while non- OPEC mem­bers' oil pro­duc­tion must also be curbed. Oman, the largest non- OPEC oil pro­ducer in the Gulf, said the Sul­tanate would slash 10% off its to­tal pro­duc­tion of just un­der 1 mil­lion b/d if other oil pro­duc­ers in both camps fol­lowed suit. Yet, dif­fer­ent philoso­phies per­sist and the over­sup­ply will prob­a­bly just get worse as Iran hopes to bring up to an ad­di­tional 1mil­lion b/d to the mar­ket in 2016 fol­low­ing the lift­ing of sanc­tions in Jan­uary.

Gulf OPEC mem­bers en­joy thicker profit mar­gins and for­eign ex­change re­serves, but a bout of global head­lines il­lus­trate how their economies are far from

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