OPEC+ likely to extend supply curb deal: Oman energy minister

OPEC, Russia and other oil producer allies — a group known as OPEC+ — have since January implemented an agreement to cut output by 1.2 million barrels per day until March 2020 in an attempt to boost prices. (AFP)
Updated 11 November 2019

OPEC+ likely to extend supply curb deal: Oman energy minister

  • OPEC, Russia and other oil producer allies have since January implemented an agreement to cut output by 1.2 million barrels per day until March 2020
  • Oil demand is improving as trade tensions soften and Oman is satisfied with current oil prices

ABU DHABI: OPEC and non-OPEC producers will probably extend a deal to limit crude supply but are unlikely to deepen cuts, Oman’s energy minister said on Monday, as the United Arab Emirates said it was not worried about long-term oil demand growth.
The Organization of the Exporting Producing Countries, Russia and other oil producer allies — a group known as OPEC+ — have since January implemented an agreement to cut output by 1.2 million barrels per day until March 2020 in an attempt to boost prices. The group meets in December.
“Extension probably, cuts I think unlikely unless things happen in the next couple of weeks,” the energy minister of non-OPEC Oman, Mohammed bin Hamad Al-Rumhy, told reporters at an energy conference in the United Arab Emirates capital Abu Dhabi.
He said oil demand was improving as trade tensions soften and that Oman was satisfied with current oil prices, which fell more than 1 percent on Monday amid concerns over the prospects of a trade deal between the United States and China.
“All indications show things are getting better, the fear of recession, the signs of agreement between the US and China is positive,” Rumhy said.
Suhail Al-Mazrouei, the energy minister of the UAE, the third largest producer in OPEC after Saudi Arabia and Iraq, told the conference that oil demand growth was “reasonable.”
In its 2019 World Oil Outlook, the producer group said it would supply a diminishing amount of oil in the next five years as output of US shale and other rival sources expanded, despite a growing appetite for energy fed by global economic expansion.
“No one source or a group of sources will meet growth in demand,” OPEC Secretary-General Mohammad Barkindo said in a panel discussion at the Abu Dhabi conference.
He said the oil industry would have to adapt to future changes in the energy mix as global population growth raises demand outlook.
Rising climate activism in the West and widening use of alternative fuels are putting the strength of long-term oil demand under more scrutiny.
“The greener forms of energy will have a higher pace of growth but conventional oil and gas will also grow. Gas will grow more as there is a demand for cleaner forms,” Mazrouei said.


$8bn blow to Erdogan as investors flee Turkey

Updated 09 July 2020

$8bn blow to Erdogan as investors flee Turkey

  • Overseas holdings in Istanbul stock exchange are at lowest in 16 years

ANKARA: Foreign capital is flooding out of Turkey in a massive vote of no confidence in President Recep Tayyip Erdogan’s economic competence.
Overseas investors have withdrawn nearly $8 billion from Turkish stocks since January, according to Central Bank statistics, reducing foreign investment in the Istanbul stock exchange from $32.3 billion to $24.4 billion.
As recently as 2013, the figure was $82 billion, and foreign investors now own less than 50 percent of stocks for the first time in 16 years.
“Foreign investment has left Turkey for several reasons, both internal and external,” Win Thin, global head of currency strategy at Brown Brothers Harriman, told Arab News.
“Externally, investors fled riskier assets like emerging markets during the height of the coronavirus pandemic. Some of those flows are returning, but investors are being much more discerning and Turkey does not seem so attractive.”
In terms of internal factors, Thin said that Turkish policymakers had made it hard for foreign investors to transact in Turkey. “This includes real money clients, not just speculative.
“By implementing ad hoc measures to try and limit speculative activity, Turkey has made it hard for real money as well. Besides these problems, Turkey’s fundamentals remain poor compared to much of the emerging markets.”
Erdogan allies claim international players are manipulating the Istanbul stock exchange through automated trading, and have demanded action to make it difficult for them to trade in Turkish assets.
Goldman Sachs, JPMorgan, Merrill Lynch, Barclays and Credit Suisse were banned this month from short-selling stocks for up to three months, and this year local lenders were briefly banned by the banking regulator from trading in Turkish lira with Citigroup, BNP Paribas and UBS
JPMorgan was investigated by Turkish authorities last year after the bank published a report that advised its clients to short sell the Turkish lira.
MSCI, the provider of research-based indexes and analytics, warned last month that it may relegate Turkey from emerging market status to frontier-market status because of bans on short selling and stock lending.
With the market becoming less transparent, overseas fund managers, especially with short-term portfolios, are unenthusiastic about the Turkish market and are becoming more concerned about any forthcoming introduction of other liquidity restrictions.
The exodus of foreign capital is likely to undermine Turkey’s drive for economic growth, especially during the coronavirus pandemic when employment and investment levels have gone down, with the Turkish lira facing serious volatility.