LONDON: Brent crude continued to hover near $70 per barrel on Wednesday with prices up 15 percent since early December, but some cautioned the oil market could be overheating.
Jean-Pierre Durante, head of quantitative research at Swiss bank Pictet, told Arab News the “price doesn’t seem justified on our fundamentals.”
Pictet is forecasting an average 2018 price of $63 per barrel, close to a recently revised figure of $62 per barrel predicted by Goldman Sachs.
Durante said oil was benefiting from bullishness about the global outlook — with stock markets buzzing, in part due to President Trump’s success in pushing through tax cuts at the end of 2017.
“For the fist time since the financial crisis we have synchronized growth around the world, in both advanced and emerging markets,” said Durante.
But he added: “Non-conventional production, in particular US shale oil, is expected to continue to play an important role in 2018 and 2019, forcing OPEC to keep restraining production.
The price has been buoyed recently by geopolitical tensions in the Middle East, protests in Iran and fears about further disruption of supplies from strife-hit Venezuela, said Durante.
He also pointed to recent data from the American Petroleum Institute that showed US crude inventories fell by 11.2 million barrels in the week to Jan. 5 to 416.6 million barrels.
However, the US Energy Information Administration on Wednesday forecast that US oil production would exceed 11 million barrels per day (bpd) by the end of 2019, shattering previous records as American producers exploit higher prices to bring more shale to market.
Heightened US activity could weaken the price despite an extension of supply constraints agreed by OPEC and non-OPEC countries at a meeting in Vienna in November.
Worldwide, the agency sees oil consumption rising by about 1.7 million bpd in both 2018 and 2019, led by China and India.
Investors have been piling into oil since December with the Financial Times reporting on Monday that the net long position in Brent crept up to a record high of 565,459 contracts — or more than half a billion barrels of oil. Combined with West Texas Intermediate, the US oil benchmark, speculators have amassed bullish bets over 1 billion barrels of crude, said the FT.
But another warning about a possible bubble has come from Commerzbank’s Eugen Weinberg, head of commodities research, who told CNBC that the price was likely to correct by at least 10 to 15 percent over the coming months “because the current fundamentals are not justifying this kind of strength,” he said.
Oil flirts with $70, but is the market overheating?
Oil flirts with $70, but is the market overheating?
Kuwait to boost Islamic finance with sukuk regulation
- The move supports sustainable financing and is part of Kuwait’s efforts to diversify its oil-dependent economy
RIYADH: Kuwait is planning to introduce legislation to regulate the issuance of sukuk, or Islamic bonds, both domestically and internationally, as part of efforts to support more sustainable financing for the oil-rich Gulf nation, Prime Minister Sheikh Ahmad Abdullah Al-Ahmad Al-Sabah said on Wednesday.
Speaking at the World Governments Summit in Dubai, Al-Sabah highlighted that Kuwait is exploring a variety of debt instruments to diversify its economy. The country has been implementing fiscal reforms aimed at stimulating growth and controlling its budget deficit amid persistently low oil prices. Hydrocarbons continue to dominate Kuwait’s revenue stream, accounting for nearly 90 percent of government income in 2024.
The Gulf Cooperation Council’s debt capital market is projected to exceed $1.25 trillion by 2026, driven by project funding and government initiatives, representing a 13.6 percent expansion, according to Fitch Ratings.
The region is expected to remain one of the largest sources of US dollar-denominated debt and sukuk issuance among emerging markets. Fitch also noted that cross-sector economic diversification, refinancing needs, and deficit funding are key factors behind this growth.
“We are about to approve the first legislation regulating issuance of government sukuk locally and internationally, in accordance with Islamic laws,” Al-Sabah said.
“This enables us to deal with financial challenges flexibly and responsibly, and to plan for medium and long-term finances.”
Kuwait returned to global debt markets last year with strong results, raising $11.25 billion through a three-part bond sale — the country’s first US dollar issuance since 2017 — drawing substantial investor demand. In March, a new public debt law raised the borrowing ceiling to 30 billion dinars ($98 billion) from 10 billion dinars, enabling longer-term borrowing.
The Gulf’s debt capital markets, which totaled $1.1 trillion at the end of the third quarter of 2025, have evolved from primarily sovereign funding tools into increasingly sophisticated instruments serving governments, banks, and corporates alike. As diversification efforts accelerate and refinancing cycles intensify, regional issuers have become regular participants in global debt markets, reinforcing the GCC’s role in emerging-market capital flows.
In 2025, GCC countries accounted for 35 percent of all emerging-market US dollar debt issuance, excluding China, with growth in US dollar sukuk issuance notably outpacing conventional bonds. The region’s total outstanding debt capital markets grew more than 14 percent year on year, reaching $1.1 trillion.
