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What do you want Dubai?
Sylvia Pfeifer and Ben Smalley , UK Telegraph
The Gulf state is the hub for recycling gushing petrodollar earnings. Sylvia Pfeifer and Ben Smalley examine what’s on the shopping list
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The Arabs are back in town. Nearly 30 years after Middle Eastern investors first bought up many of Europe’s and America’s prize assets, they’re back. And, just like in the 1970s, the invasion is being fuelled by record oil prices of more than $60 a barrel.
“The Middle East is flush with cash right now,” says one banker who does business in the region. “We have not seen so much liquidity for years. The money is flooding from the central banks to the banks and down to the merchant families.”
Many Middle Eastern investors stayed away from the US and Europe in the wake of the September 11 terrorist attacks, but, armed with excess cash and a new-found confidence, they are deploying vast amounts of capital, both domestically and abroad.
The size of the oil windfall is staggering. The International Monetary Fund estimates that Middle Eastern and North African oil exporting countries will earn about $530bn (£300bn) from crude sales next year, up from $300bn in 2003. With imports up by only $100bn in these countries, that leaves a surplus of around $200bn in excess cash – footloose money looking for a home.
(6 November 2005)
IEA forecast of future oil price rises by a third
Oliver Morgan, The Observer (UK)
The International Energy Agency has revised its forecast for future oil prices up by more than a third after a review of production capacity in the world’s 200 most important oil fields.
The increase comes against a background of rising demand and prices over the past three years. The benchmark West Texas Intermediate crude, traded on the New York Mercantile Exchange, hit a high of $70 a barrel after disruption to production and refining facilities in the wake of Hurricane Katrina in the Gulf of Mexico.
The IEA, the energy agency of the Organisation for Economic Co-operation and Development, expects the nominal price of WTI to be $45 a barrel in 2010, a significant increase from a similar forecast last year of $33.
(6 November 2005)
Arabs riot in oil-rich Iran province
IranMania.com
LONDON – Iranian police have clashed with hundreds of Arab separatists rioting in Ahvaz, in oil-rich and Arab-dominated Khuzestan province, press reports said.
About 200 men, dressed in traditional Arabic clothes, marched towards the city centre on Friday, where they were stopped by police. They started throwing stones and shouting “my blood may be poured for the Arab nation”, according to AFP. The police arrested the instigators and several others carrying swords and frightening people at a crowded intersection, the reports said. Local officials were not available for confirmation.
Situated close to the border with British-occupied southern Iraq, Ahvaz has been hit by a wave of deadly unrest this year, including riots in April and a series of car bombings prior to Iran’s presidential election in June.
Iran has pointed the finger of blame at Britain, which has troops based just across the border in Iraq and which has denied any involvement.
(6 November 2005)
Iran oil bourse:a threat to the petrodollar?
Emily Rutledge, Al Jazeera
Iran’s decision to set up an oil and associated derivatives market next year has generated a great deal of interest. This is primarily because of Iran’s reported intention to invoice energy contracts in euros rather than dollars.
The contention that this could unseat the dollar’s dominance as the de facto currency for oil transactions may be overstated, but this has not stopped many commentators from linking America’s current political disquiet with Iran to the proposed Iranian Oil Bourse (IOB). …
A move away from the dollar and a strengthening of the euro would further benefit Iran as according to a member of Iran’s Parliament Development Commission, Mohammad Abasspour, more than half of the country’s assets in the Forex Reserve Fund are now euros.
It is primarily the US which stands to lose out from any move away from the petrodollar status quo, it is the world’s largest importer of oil and a move away from invoicing oil in dollars to euros will undoubtedly have a negative effect on its economy. Fewer nations would be willing to hold the dollar in reserve which would cause a significant devaluation and result in the loss seigniorage revenues. In addition, US energy-related companies stand to lose out as they will be unable to participate in the bourse due to the longstanding American trade embargo on Iran.
(6 November 2005)
Strangely similar to related articles by this author.. -LJ
President urged to use oil reserve
N.E. senators cite rising costs of home heating
Alan Wirzbicki, Boston Globe
WASHINGTON — With winter approaching and home heating costs expected to rise by more than 30 percent across the Northeast, a group of New England senators has asked President Bush to release the federal government’s emergency reserve of heating oil for the first time.
Since 2000, the government has stockpiled 2 million barrels of heating oil — enough to heat the entire region for two days — at facilities in Providence, New Haven, and Woodbridge, N.J.
Senator Olympia J. Snowe, Republican of Maine, and senators Christopher J. Dodd and Joseph I. Lieberman, both Democrats of Connecticut, asked Bush last week to tap the reserve, citing the unprecedented strain on oil-and-gas supplies in the region created by hurricanes in the Gulf of Mexico.
Rising prices along with lower-than-usual inventories of heating oil in the Northeast are ”a recipe for disaster,” the senators wrote in the request. In recent weeks New England lawmakers have expressed frustration with Washington’s response to the region’s looming energy crunch.
Releasing oil from the reserve could lower prices, but a spokesman for the Department of Energy, Craig Stevens, said the reserve could be used only in serious emergencies. ”We need to keep our powder dry,” Stevens said. ”We don’t want to use it all now and then have nothing available later in the winter if it’s really needed.”
(6 November 2005)
A mayor on a Vespa, and other ways to set energy examples
T.R. Reid, Washington Post
DENVER — The little red motor scooter pulled up beneath the tall dome atop Denver’s city hall, and the rider strolled right past the security guards into the mayor’s office.
Which was not surprising, because the man on the scooter was in fact Mayor John W. Hickenlooper, who tools around this sprawling city on a red Vespa as part of his effort to remind local residents of the need to save energy amid skyrocketing oil prices.
Like the popular Denver mayor, elected leaders all over the country are searching for ways this fall to respond to the surge in gasoline and heating oil prices. But global energy markets, coupled with pinched government budgets at the federal and local levels, make it difficult for governors and mayors to go much beyond symbolic measures such as lowering thermostats in public buildings and finding fuel-efficient ways to get around.
(28 October 2005)
Oil producers are urged to invest in more capacity
Jad Mouawad, NY Times
Oil prices will keep rising over the next two decades unless the oil-rich nations of the Middle East and North Africa substantially increase investments in their energy sectors, warns a new report to be released today by the organization that represents energy-consuming nations.
The World Energy Outlook, an annual publication that outlines long-term forecasts by the International Energy Agency in Paris, calls on producers like Saudi Arabia to expand their investments to meet a projected 40 percent jump in oil demand by 2030.
…But the energy agency, which represents the interests of oil-consuming nations, including the United States, acknowledged that some countries might not be willing to invest in higher output. Instead, they may seek to curb their output growth, leading to higher oil prices.
“If these countries do not increase their investments substantially, we will end up with difficulties on the energy markets,” said Fatih Birol, the energy agency’s chief economist. “We may end up with much higher prices.” Mr. Birol, speaking from Paris ahead of the report’s release, said, “The issue in the oil business today is not the reserves but the money, the investment decisions, the investment climate.”
The energy agency acts as a policy adviser and forecaster for industrialized nations, and its reports are widely read by governments worldwide and the energy industry. But the agency’s political bias toward oil-consuming nations sometimes leads it to produce assessments that some consider unrealistic.
For example, under the agency’s model, Saudi Arabia would need to bring its production up to 18 million barrels a day by 2030 to meet the jump in demand. Today, it produces about 10.5 million barrels a day.
(7 November 2005)
