TPT March 2014

Global Marketplace

A contrarian view from the United Arab Emirates: the American shale oil boom is no cause for anxiety

As to how steep a price drop can be expected over the course of 2014, a recent report by the US Energy Information Administration predicted a gradual reduction and an average of $104 per barrel for the year. In general, observers of the UAE oil market did not foresee much of an effect in the vicinity. “It won’t have a major bearing,” said Mr Williams of HSBC. “Whether oil is at $100 or $120 a barrel doesn’t make that much difference. Oil revenues only seep through into the domestic economy when spending increases. I don’t think [changing] oil prices will have an impact on spending plans.” OPEC itself was bullish on the oil market. In December it declared, “Although world oil demand is forecast to increase during 2014, this will be more than offset by the projected increase in non-OPEC supply.” › Gulf News also reported (2 January) that crude oil from Iraqi Kurdistan (KRG) had started flowing through a new pipeline to the Turkish Mediterranean export hub of Ceyhan, but that it would not be shipped to world markets without a go- ahead from Baghdad. “[The oil] is being stored,” the Turkish energy minister, Taner Yildiz, said at a news conference. “It will not be exported without the consent of the Iraqi government.” Late last year Turkey signed a multi-billion-dollar energy package with KRG which will see the rich hydrocarbon resources of the semi-autonomous Kurdish region exported

From Abu Dhabi, Gulf News staffer Sarah Diaa reported that market analysts in the region doubt that increased production of shale oil in the United States poses any threat to the oil producers of the Persian Gulf. “I think shale oil and gas production is important for the US and for the US industry,” Simon Williams, the chief economist for Middle East and North Africa at HSBC, told Ms Diaa (1 January). “I don’t expect it to have a major bearing on the global energy market.” This was in line with an earlier assertion by Abdullah Al Badri, the secretary general of the Organization of the Petroleum Exporting Countries, that OPEC could accommodate the US shale boom. That production was reported to have reached 2.7 million barrels per day (bpd) last year and is set to grow. Even so, analysts are expecting a drop in the price of crude oil from the 2013 average of $108 per barrel, with higher production the chief factor. Both the US and OPEC – of which the UAE is a member – will contribute to this year’s greater supply.

TUBE 2014 DÜSSELDORF : 07.04. – 11.04.2014, HALLE 6, STAND C34

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