Home Page - Gulf in the Media
HomePoliticsEconomy                               Set Gulfinthemedia.com as home page
Opinions
"Postings of opinions published in the Gulf and international newspapers
 Print  Send This Page
Save Listen to this Article
Changing perceptions on markets   

Gulf Times - 08 May, 2012
Author: Justin Dargin

The global oil and gas market has undergone significant permutations since the beginning of the 21st century. These changes will have a lasting impact on the industry. In particular, the impact on the countries of the Gulf Co-operation Council (GCC) will be immense.
The growth in liquefied natural gas production, the spurt in the global development of unconventional gas, the shale gas revolution and the ripples from the Arab Spring have caused the market to be perhaps more unstable now than at any other point in history since World War Two. Moreover, the risk of military conflict with Iran, the rising industry operating costs and the increase in riskier oil exploration and production have created a dynamic environment that has injected much more qualitative and quantitative risk into the global market.
Despite the increased risk perception related to the Arab Spring, its ultimate impact is largely superficial when compared to the substantive upward pressure imposed by demand from emerging markets. Nonetheless, if unrest continues in the Middle East and North Africa (Mena) region, the long-term impact may be that markets will begin to incorporate this risk on a more permanent basis in evaluation of export potential from the region.
The market misunderstanding of the relation between the Arab Spring and the foundational elements of the oil sector will continue to lead it to overestimate the influence of the Arab Spring and will place considerable volatility in the market as a result.
The Mena region has the most prodigious energy reserves in the world. In 2010, it contained 816bn barrels of proven oil reserves. Overall, the region holds about 57% of proven international oil reserves, with Saudi Arabia by itself holding a disproportionate share of 20% of the global total. In 2010, the region produced 29mn barrels per day (bpd), which comprised more than a third of global production rates.
Furthermore, due to the advantages of enormous oil reserves and that the region only has 6% of the global population; the region exports the majority of its oil production. In terms of natural gas, the region holds 41% of the proven global natural gas reserves (2,868,886 billion cubic feet), but only produces and exports a fraction of that.
The political protests and civil war in some Mena countries (Libya and Syria) injected significant risk-related volatility into the international oil market. But the principle outcome of the Arab Spring on the oil market was not the structural and immediate impact on oil production. This was limited in most countries outside of Libya, and where it did occur, was brought more or less under control.
The greatest impact of the Arab Spring was in oil market perceptions, rather than fundamentals. The so-called fear premium, wed to the anxiety about potential contagion, caused oil markets to roil with the trepidation that production disruption could happen in the major Gulf producers, even though nothing of that sort has happened (outside of Libya) nor appears on the horizon. While the Arab Spring had an enormous impact on oil price volatility, its impact on market fundamentals is slight.
It must be remembered that the true rise in the international oil price after the global economic crisis began in earnest in October 2010. The global price of Brent broke out of the $ 70 to $ 80 range that it had been oscillating in between October 2009 and October 2010.
The beginning of the oil price climb occurred prior to the Arab protests and the resultant geopolitical chaos. The initial increase in the oil price had much more to do with robust demand emanating from the emerging markets rather than the Arab Spring. The impact of the Arab Spring on global energy markets has been the injection of significant volatility on top of the robust structural demand increases from the emerging markets (principally the Asia-Pacific region).
In regard to the global energy sector, the world is entering a period of enhanced pricing risk. The perception of risk factors by the market are expanding and price volatility is going to increase as a result. The new reality of extreme fluctuations in global energy prices illustrates that market expectations will be much more tightly intertwined with domestic energy policies, geopolitics, geological conditions and the long-term impact of global climate change negotiations on global energy demand.
Moreover, the risk of military conflict in the Mena region and the economic growth of the emerging markets will operate as additional market drivers, thereby leaving the ability to adequately forecast mid-to-long term price developments extremely tenuous.- Global Experts

l Justin Dargin is one of the world’s leading Middle East energy experts specializing in the Gulf energy sector and regional industrialisation. He is a fellow at the Harvard Kennedy School.
l Global Experts (www.theglobalexperts.org), is a project of the UN Alliance of Civilizations.
 
Dear Zarif, you can't liberate Al-Quds with pistachios and caviar
Source : Arab Times  
Date : 2016-07-29
Author : Ahmed Al-Jarallah
Mohammad Jawad Zarif was not funny in his lectures about the chastity of revolution and his attempt to cover up the scandals which the government of his country has been...
Brexit heralds a new era in UK-GCC relations?
Source : The Peninsula  
Date : 2016-07-29
Author : Sean Evers
You're landing at New York's LaGuardia Airport on the "expressway" approach-it's called that because you come in low enough to buzz the Grand Central Parkway and Mets' Citi Field before...
Meeting the challenges of population growth
Source : Saudi Gazette  
Date : 2016-07-29
Author : Hameed Al-Anazi
The Kingdom's population has increased to over 20 million. With expats, it has reached 31 million. According to the United Nations, it is expected that the Saudi population will reach...
Our airports should be run by international directors
Source : Saudi Gazette  
Date : 2016-07-29
Author : Muhammad Al-Saad
The problems associated with the services provided by Saudi Arabian Airlines (Saudia) have never been solved. We have seen the same problems in local and international airports over the past...
Why do our universities prefer to hire non-Saudis?
Source : Saudi Gazette  
Date : 2016-07-29
Author : Khalid Al-Wabel
Six Saudi universities rejected the job applications of 200 Saudis who hold PhD degrees in different majors while the same universities announced 851 job openings for non-Saudis. This news appeared...
How can there be guardianship over women in a modern Saudi Arabia?
Source : Saudi Gazette  
Date : 2016-07-28
Author : Faisal J. Abbas
So much has happened over the past two weeks: a terrorist attack in France on Bastille Day, a failed Turkish coup, Donald Trump officially became the Republican Party nominee and...
Organizing polygamy
Source : Saudi Gazette  
Date : 2016-07-28
Author : Samar Al-Mogren
I was talking jokingly to a Moroccan woman working in Riyadh. "If you don't return to Morocco soon, your husband will marry another woman," I said....
Time to wage a media war
Source : Arab News  
Date : 2016-07-28
Author : Tariq Alhomayed
The least that can be said about the Iranian authorities destroying 100,000 satellite dishes on the grounds that they breach regulations and threaten moral, cultural and social values is that...
Peace in Syria? It takes more than regime ceasefires
Source : Al Arabiya TV  
Date : 2016-07-27
Author :
This week the Syrian regime announced that it was prepared to enter peace talks 'without conditions'. Almost immediately members of the opposition rejected the claim. It’s not entirely surprising -...
The disgruntled over Gulf stability
Source : Al Arabiya TV  
Date : 2016-07-27
Author : Turki Al-Dakheel
The current debate on social networking sites expresses a number of dangerous phenomena. The most prominent is linked to the motherland and citizenship, which are honorable concepts. Citizenship is a...
Does university matters while offering employment?
Source : Oman Daily Observer  
Date : 2016-07-27
Author : Haider Al Lawati
The recent poll conducted by the Graduates Survey Department of the Ministry of Higher Education with the chief executives and employers in public and private sectors has resulted in findings...
Art appreciation is a foundation of any culture
Source : Saudi Gazette  
Date : 2016-07-27
Author : Tariq A. Al-Maeena
The creation of a commission for entertainment and culture as part of Saudi Vision 2030 is a great boon for art and culture lovers in the Kingdom. When one...
Undermining Syrian opposition
Source : Arab News  
Date : 2016-07-27
Author : Osama Al Sharif
These are bad times for the political arm of the Syrian opposition. There endemic divisions notwithstanding, now they fear that a US-Russian understanding may derail the one thing that keeps...
Turkey's stability is a must
Source : Arab News  
Date : 2016-07-27
Author : Abdulrahman al-Rashed
When Egyptians took to the streets in July 2013 protesting the rule of then President Muhammad Mursi, observers were filled with fear even more than when people had filled Tahrir...
Qaboos Sultan of 'challenges'
Source : Arab Times  
Date : 2016-07-26
Author : Ahmed Al-Jarallah
Forty six years ago, he disembarked from an old model civilian airplane at a humble airport in Muscat - a young man with a skinny body and thick beard....
Total 200 Results in 14 Pages
1 
For more news, views and reports about this topic, please subscribe
to GRC website: www.grc.net
Sat Jul 30, 2016| 24-شوال-1437هـ
Blow to peace effort - Houthis ink deal with Saleh to run Yemen
KSA, Kuwait protest Iran foray into Gulf waters
Syria's Nusra Front says it is breaking ties with al Qaeda to avert attacks
Qatar, Argentina sign MoUs
Ensure workers do not migrate illegally: Oman advises India
SAGIA grants Pfizer 100% ownership of KSA business
Syria and Russia's cluster bomb use relentless: HRW
Yemen's 'political council' is rebels' desperate bid against legitimacy: Gargash
Flagging non-oil business dampens outlook for Gulf
Iranians 'attacked 12 embassies in 25 years'
IS 'don't represent Islam' - White House
Inter-Yemeni consultations resume in Kuwait
Qatar Airways said to lift IAG stake to 20%
Solid Bahraini-Jordanian ties haileld
200 women allowed by courts to travel alone
  Op-Ed
Solar so good: it's the beginning of a longer journey
In terror crosshairs
Dear Zarif, you can't liberate Al-Quds with pistachios and caviar
Brexit heralds a new era in UK-GCC relations?
More>>  
    Reports
GCC Markets Performance - June 2016
Brexit in the GCC Context…
More>>  
    GCC Press Agencies
Day's main stories from the GCC Press Agencies
    GRC Analysis
The GCC and the EU's New Global Strategy
For the GCC States, a different Europe to deal with
GCC-Russia Relations: Lot of Rhetoric but Little Substance
    GRC Commentary
Earth Day 2016: The Promised Day
An Evolving Saudi-US Relationship
Water and Jobs: Hitting Two Birds with One Stone!
    GRC Press Release
Gulf Research Center press releases to the media
    GRC Publications
Renewable Energy Policies in the GCC: Challenges and Prospects
Foreign Investments in the GCC and Investments of GCC Countries Abroad
Gulf-European Relations in 2015
    GRC Newsletters/Bulletins

Enter your email to get the Newsletter
Go
A Note on Syrian Refugees in the Gulf: Attempting to Assess Data and Policies
      
Privacy Policy | Contact Us | Terms & Conditions | About Us |
Weather | Qibla Directions | Hijri Date Conversion Tool
Full Page :total time:0  |   30-- 30 Middle Page :0  --   | Right : 30 - 30--en--sess-enreq-en-coming