Global trade war, geopolitics, protectionism hit oil stability
Partnership must for oil companies
abu dhabi — Volatility in oil prices is mainly due to global trade war, geopolitical concerns, currency issues and protectionism policies rather than supply and demand issue, industry executives and officials said on Monday.
Mohammed Hamad Al Rumhy, Oman’s Minister of Oil and Gas, said volatility has been on the rise over the years.
“Around 15 years ago, it was only supply-demand factor that dictated the oil prices; then other factors came in such as currency issue. Then, we started to hear sto- ries of hedge funds having impact on movement of prices followed by geopolitics. It is difficult to quantity impact of currency movement, political situation, decision coming from White House and stock markets factors on the oil prices,” Al Rumhy said during a panel discussion at Adipec 2018 conference.
He noted that the producers and consumers will never agree on a single price. “It is extremely difficult to satisfy everyone and that is what is happening right now. It is extremely dangerous phase when investors take away trillions of dollars in investments when the oil price is too low... Let us engage with each other and discuss rather than using social media tools to say what is right and what is not.”
Dr Ayed S. Al-Qahtani, director, Research Division, warned that trade war and protectionism is not favourable for economic growth and oil prices. Tarek El Molla, minister of petroleum and mineral resources, Egypt, emphasised on maintaining the demand-supply balance and proper pricing over a long period of time because volatility will impact both producers and consumers.
“At the end of the day, no oilproducing country will put strategic plans in place due to volatility and consuming nations cannot budget until they don’t see the long term prices.”
Citing factors beyond oil-producing nations, he blamed global politics, speculators and stock exchanges for the volatility.
Haitham Al Ghais, Opec governor for Kuwait, pointed out that trade tariffs not only affect physical trade but consumer confidence also and it has ripple effect.
He said the oil demand is slowing down as International Energy Agency and Opec have revised own their numbers for the next year.
“It is alarming, so we have devised certain marketing strategies with consumer nations with long term strategies. I hope it doesn’t prolong further because it will create worse environment for oil prices in 2019.” abu dhabi — Top names from the oil and gas sector said that even though they are competitors on the ground, partnerships are the key to succeed in future.
BP group chief executive Bob Dudley said oil and gas climate initiative with the likes of ExxonMobil and Chevron, Occidental Petroleum, is an example of companies coming together on a common platform in fight against climate change. “This sector is an unusual place for partnerships. We compete and yet we are partners,” he said during a panel discussion held as part of at the Adipec.
Dudley noted OGCI as complicated group but led by common vision of CEOs.
“Industry groups do get together but this (OGCI) is very unique. The oil and gas climate initiative was formed four years ago with 13 companies joining with a common target to reduce emissions. We put together a $1-billion fund over 10 years for innovative low emission technologies. CO2 is an obvious threat and climate agenda is on everyone’s mind.”
Officials from CNPC, BP, Eni and Petronas cited natural gas sector where appetite is growing and is witnessing increased partnership.
CNPC chairman Wang Yilin
We have devised certain marketing strategies with consumer nations with long term strategies Haitham Al Ghais, Opec governor, Kuwait
We have technology ready to develop Shale gas Wang Yilin, CNPC chairman