Global Economy and Energy Markets Weekly Commentary – 17th Nov ‘22

In this commentary to the Gulf Intelligence, Dr Carole Nakhle, CEO of Crystol Energy, discusses the latest macroeconomic developments and their implications on energy demand.

Dr Nakhle talks about the expectations of the Dec 4th OPEC+ meeting. There’s a good chance they might stick to what they had announced last time, particularly if they keep their gloomy outlook for demand. Privately, some of the OPEC+ members feel that the 2 million barrels per day (mbd) cut was too much but publicly, they have put on a united front. And with their demand forecast recently revised down again, that by itself could provide them with the support they need to justify their cuts.

However, she highlights that the biggest wildcard today is demand, with China the largest component. We’ve heard about a bit of easing of lockdowns but that could mean that infections are going to spread more rapidly, and that increases the likelihood of more lockdowns even if they are short lived, and that by itself creates uncertainty.

Dr Nakhle further comments on the US midterm election result and whether that will influence Biden’s energy policy. It will be interesting to see whether Biden now softens his stance on SPR releases, or towards OPEC+ and prices at the pump. The US has really politicised this topic, putting all the blame on Russia so far. In terms of any impact on domestic energy policy, she does not expect them to show a more lenient stance on the oil industry. They want companies to invest but then they threaten them with the idea of windfall tax. What people don’t realize is that in the US, the tax system on oil is already much more complicated than elsewhere. And on top of everything, they then subsidise demand and tame energy prices. It’s contradictory.

Dr Nakhle is joined by Richard Redoglia, CEO, Matrix Global Holdings, and Matt Stanley, Partnerships Lead, Middle East, Kpler. Frank Kane moderates the discussion.