At that time, the United States had little interest in Middle East oil or in any political designs on the region. Many wealth management reports show that direct investment by Family Offices outside public markets is increasing year on year. On the same panel, which was hosted by Al Arabiya news network, the chief executive of Bahrain's Economic Development Board laid out the challenges facing the Middle East but said they could present an opportunity for transformation. "OPEC produces around one third, and two thirds comes from the rest of the world. An oil tanker is seen off the port of Bandar Abbas, southern Iran, on July 2, 2012. 09, 2021 | 11:02 AM (Last updated: May 09, 2021 | 04:36 PM) Fire at Syrian oil refinery extinguished after leakage. Oil prices rise after robust China data, Middle East tension; Oil rises nearly 2% on US vaccine rollout, Middle East tension; Payments giant Stripe expands to Middle East with Dubai office; Explosion strikes Israeli-owned ship in Middle East amid tension; Heavy snowfall, gales as winter storm hits Middle East Libya has in recent years emerged as the dominant transit point for migrants fleeing war and poverty in Africa and the Middle East. There are two camps, there are optimistic people and there are pessimistic, and I am with the first camp, and I think this is a year of correction. Speaking at a panel discussing economic reforms in the Middle East at WEF on Friday, fellow Gulf Cooperation Council (GCC) minister Anas Khalid Al Saleh, who is deputy prime minister, finance minister and acting oil minister of Kuwait, said reforms were needed with or without a backdrop of lower oil prices. Mohammed bin Abdullah El Kuwaiz, chairman of the Saudi Capital Market Authority, recently revealed that there are 15 applications for new listings in the market. Covid pandemic has created a recession for women and girls, Sweden’s foreign minister says, Thailand is set to kick off vaccination drive next month, its finance minister says, Malaysia's latest Covid lockdown won't hit the economy as much as last year, finance minister says. The rest of the world introduced 2.7 million barrels of additional capacity, so they've basically flooded the market," he said. This includes the already headline-grabbing land property development projects. The Middle East prepares for life after oil Governments and wealthy families are accelerating the changes needed to safeguard their financial future. As such, the question of diversifying traditionally-oil based economies and reducing the reliance on oil has become a key issue in the Middle East. … Gardner, Three Kings: The Rise of an American Empire in the Middle East after World War II (New York, 2009) , 1 9-25 . If you wish to discuss your business or personal structuring needs, please contact one of our team. In all three of these events, the United States was not involved in the purchasing of oil in the Middle East. And PwC’s Private Equity Trend Report said 73% of private equity firms consider Family Offices as potential investors in their next fund. OPEC still plays key role: UAE energy min. The result was an economic boom that spanned industries ranging from financial services and real estate to … The Middle East will be back on track for renewables growth in 2021, with hydrogen taking a growing role after a year of delays and cancellations as major oil exporting nations focused on repairing st Home to the Cradle of Civilization, the Middle East—interchangeable with the Near East—has seen many of the world's oldest cultures and civilizations. A Division of NBCUniversal. Oil prices shot up after the attack in Saudi Arabia. India had not cancelled any shipment of crude oil from the Middle East in 2020 when oil demand collapsed due to COVID-19, the source said. Each of these has over 100 billions of barrels in proved reserves. "The region is facing numerous challenges, oil prices declined by 70 percent and there's pressure on the fiscal budgets of all the regional economies. After a period of micro-continental movements and ocean water subduction along the northeastern edge of the African continent, the Middle East started to rapidly evolve into a region filled with … According to geologists, the Proterozoic to Cambrian period transition that took place around 542 million years ago is where long-term fossil fuel formations started to take place in the Middle East. I think it is an unprecedented opportunity for reform.". Despite repeated predictions that the United States would pull back from the Middle East, exhausted after decades of military intervention, a post-COVID-19 world will likely see more intense U.S. involvement in the region, and the increased profile of China. The Covid-19 pandemic has accelerated many changes already underway, such as the shift away from traditional hydrocarbon revenue. The Middle East: Life After the Oil Bust Mar 11, 2009 Time was when oil was being sold at $140 a barrel, and while consumers cringed at the high prices, the oil-rich nations of the Middle East prospered. Simultaneously, economies across the region have been hit hard after oil prices dropped to historic lows last month, owing to … All Rights Reserved. As such, the question of diversifying traditionally-oil based economies and reducing the reliance on oil has become a key issue in the Middle East. The global upheavals of the past 12 months have been challenging even for a region like the Middle East, renowned as it is for the steady way it adapts to new trends. It is true, of course, that terrorism and especially the attacks of September 11, 2001, helped accelerate the drive to war in 2003, but to focus too much on 9/11 is to overlook and discount the ways that oil and oil producers have long been militarized, the role oil has played in regional confrontation for almost four decades, and the connections between the most recent confrontation with Iraq and those of the past. The oil-rich country plunged into chaos following a … We can help with everything from simple company administration matters, information about SPACs and assistance with an Initial Public Offering SPA, to wealth structuring matters or family governance. It can create a war chest for future acquisitions or opportunistic investments. Our focus is on bespoke corporate, fund, capital market and private wealth services that enable our clients to grow and thrive. In this photo released by the Syrian official news agency SANA, firefighters put out a fire at the Homs Oil Refinery in the central province of Homs, Syria, Sunday, May. The other area proving increasingly attractive to Family Offices is private equity, where returns outpace public markets. © 2021 CNBC LLC. Our exceptional client service and the ability to navigate the complexities of conducting business in the region has cemented our position as one of the leading service providers. The history of the oil industry in Iran is representative of the effects of the discovery of oil in the They increased more than 14% on Monday , to close at $62.90 a barrel. There have also been significant changes to the region’s tax system. "In my mind, this period is a blessing in disguise. In late April, Syria’s oil ministry said a fire erupted in an oil tanker on its coast after what it said was a suspected drone attack. Follow CNBC International on Twitter and Facebook. The Dow Jones Industrial Average hit 35,000 for the first time, before pulling back late afternoon, while the S&P 500 languished and Nasdaq fell over 2%. The rise of electric cars and the electrification of transportation in general will mean that oil will probably never run out. The first time a Western power got soaked in the politics of oil in the Middle East was toward the end of 1914, when British soldiers landed at Basra, in southern Iraq, to protect oil supplies from neighboring Persia. The first two of these are finite in supply but – for better or worse – have powered the global economy and made the lands in which they are found, for the most part, fabulously rich. You layer on top of that the demographic challenge and the youth unemployment that we see – which is north of 30 percent – and lastly, the security challenge," Khalid Al Rumaihi said. The 2020 Knight Frank Wealth Report and Preqin Annual Report, which examined global investment asset allocation by Family Offices, found that private equity and real estate were clear favourites. He said that the UAE's government was about to go on a ministerial retreat to discuss developing the economy so that " the impact of the oil prices' fluctuation is not going to impact the budget of the United Arab Emirates and all of its states, and I think it's doable.". To increase “dry powder” reserves (committed, but unallocated capital), some families across the GCC look to listing as a way to generate liquidity for further investment. This wealth in the Gulf countries also has outstanding liquidity, with the report also stating that 82% of this was held in investable assets, compared with a world average of 60%. The Middle East holds 48.1 percent of the world’s oil reserves, according to BP, of which the Gulf Cooperation Council (GCC) countries accounts for 29 … Pain will be felt across the region. Get this delivered to your inbox, and more info about our products and services. The first half of the year is definitely not going to be easy, but (I think) we are going to see correction in my view in the second half, because I cannot see from where additional oil is going to come from, except from Iran, and their announcement, and that is not going to offset the growth in demand, so I am optimistic.". Got a confidential news tip? We examine the growing professionalisation of Family Offices in this article. We want to hear from you. Clearly, Family Offices are adapting to the low yields from bond markets and other traditional investments by diversifying their portfolios, often in sustainable and ethical ways. While the lower oil price has undoubtedly brought pain to the Middle East's economic powerhouses, others see the new era of low oil prices as an opportunity. Throughout the 1930s, however, oil was discovered by American oil wells in Saudi Arabia. Already OPEC's share in India's oil … "We need innovation in our economies…and we have to look at how we allow innovation in our economy," he said. A brief but incisive account of the impact of petroleum on the people of the general area is given by Rageai El Mallakh in "Abu Dhabi: The Challenge of Affluence," Middle East Journal, May. In 1910 and 1927, oil was discovered in Egypt and Iraq, respectively. The Economic Impact of Oil in the Middle East. Oil in the Middle East was first discovered in Persia in 1908. 9, 2021. Suhail Bin Mohammed Al Mazrouei, energy minister of the United Arab Emirates (UAE) told CNBC on Friday that the Emirates were moving away from its dependence on oil. Middle East. "We are also investing a lot outside Emirates, and I think collectively we can manage that transition to have the revenues from the oil industry as a luxury, or as an additional profit that's going to be reinvested and not to have it as a major contributor in our budget," he said. Data is a real-time snapshot *Data is delayed at least 15 minutes. How this will look once the pandemic is over is a moot point. Middle East oil was discovered during the first rush to look for oil outside the U.S., when governments and industrialists were attempting to find out how much The growing number of liquidity events, such as listings in the Saudi market, plays into this abundant and fluid wealth. Twilight of an eraThe end of the Arab world’s oil age is nigh. Sign up for free newsletters and get more CNBC delivered to your inbox. Demand for oil is expected to peak in 2040, and the report suggests that “at the current fiscal stance, the region’s financial wealth could be depleted by 2043”. This was already happening pre-pandemic and, given the hype around SPACs and current global listings data, it is a trend we can safely assume will continue. "Everybody agrees that there is no choice but to take the necessary steps for the sustainability of growth. The Kingdom of Saudi Arabia (KSA) is at the forefront of change, its Vision 2030 being arguably the boldest initiative. VAT, levied by KSA, Bahrain and the United Arab Emirates (UAE), is proving attractive to other governments seeking new revenue streams. ", "The market will balance itself, ultimately, and the timing is not going to be way far from either. But despite the region’s oil heavy focus, the country of Bahrain has already become their first post-oil economy. Militants using bombs attacked two oil wells at an oilfield close to the northern Iraqi city of Kirkuk on Wednesday, killing at least one policeman and setting off fires, the oil ministry said. The end of the Arab world’s oil age is nigh. Can’t find what you’re looking for? The Middle East will run out of oil as fast as it will run out of sand. It is the premier source of information for industry leaders and professionals. Al Mazrouei said OPEC was not to blame for the glut in oil supply that was hurting the Middle East's domestic economies. So it is no surprise that the Family Office has emerged as a significant influencer in the private wealth industry, both in terms of structuring trends and fund investment. Since the Saudi oil company Aramco’s record flotation last year, there has also been a big increase in companies wanting to list on the Saudi Stock Market, Tadawul. 2 For an alternative take on the political economy of oil and the need to protect supply, see Timothy Mitchell, We have been present in the Middle East for over 20 years, providing world-leading, specialised administration services in more than 30 jurisdictions. JERUSALEM - Israel closed all its Mediterranean beaches until further notice Sunday, days after an offshore oil spill deposited tons of tar across more … "In the UAE we are diversifying the sources of energy…and also we are diversifying the sources of income. Oil, gas and sunlight are perhaps the three defining characteristics of the Gulf states and the wider Middle East. Why? This history started from the earliest human settlements, continuing through several major pre- and post-Islamic Empires through to the nation-states of the Middle East today. The largest producer in the Middle East is Saudi Arabia, pumping about 10.4 million barrels per day, and the biggest oil reserves are located in the Middle East… This helps to ensure sustainability for the family, diversifies investments and reduces the risk of exposure to a single market, region or sector. Outlook one year after oil hit negative prices: Rystad Energy ... Oil & Gas Middle East covers the latest news and in-depth analysis across the region’s upstream sector, leveraging its print and digital products to act as the meeting point of the oil and gas industry. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Over the past two years, new forms of taxation have been introduced by a number of GCC countries. We can support you with our wide range of expert services. Which is never. Family-owned businesses are a significant driving force in the growth of the Middle East. Middle East In Turkey, protests against Israel over surge in violence May 10, 2021 Middle East U.S. military ship fires 30 warning shots after encounter with Iranian vessels May 10, 2021 5 Oil production began in Abu Dhabi in 1962, in Dubay in 1969, and in Sharjah in 1974. By Wednesday, the price had … The International Monetary Fund’s (IMF) 2020 report, The Future of Oil and Fiscal Sustainability in the GCC Region, highlighted the need for Gulf Co-operating Council (GCC) countries – which account for around a fifth of the world’s oil production – to accelerate radical initiatives to reduce their reliance on it. Oil prices rose as much as 7 percent on Friday to above $31 in their largest weekly rally in three months, as a cold front sweeping the U.S. and Europe supported prices. Singapore and Hong Kong prepare to join the SPACs boom ›, Why SPACs should consider heading for The International Stock Exchange (TISE) ›, Transferring private wealth in the Bahamas: why succession planning matters ›, Growing complexities of private capital will accelerate after the pandemic ›, Bonds, Loans and Sukuk Middle East conference 2021 ›. An employee of the Kuwait Oil Company (KOC) looks at 25 January 2005 the Gathering Center No.15 of al-Rawdatain field, 100 kms north of Kuwait City. The global upheavals of the past 12 months have been challenging even for a region like the Middle East, renowned as it is for the steady way it adapts to new trends. "We must not tie reforms with the oil prices," he cautioned. We are developing our economy, and year on year we are seeing that the non-oil economy's contribution is growing," he told CNBC on the sidelines of the World Economic Forum (WEF) in Davos. But the profits that oil producing countries get from oil sales will fall drastically. The global transfer of wealth from corporations to individuals is projected to reach new highs in the coming decades. The U.S. Treasury sanctions have targeted a network that spanned Syria, Iran and Russia responsible for shipping oil to the Syrian government. And the need to diversify in order to survive has not only been felt at the government level: the region’s many Family Offices are assessing the tricky balancing act involved in making changes that bring immediate benefits without being detrimental to future generations. In addition, countries like the UAE have removed long-standing fuel subsidies. The growing need for fiscal sustainability of family wealth requires a strong flow of deals and attractive investment opportunities, as well as a professional investment team. There has been much speculation that OPEC could change course as its strategy bites at home but Al Mazrouei was optimistic that there would be a correction in oil prices without OPEC intervention, saying it was anyway unfair for OPEC to "step in and correct the market, 100 percent of the market, of this oversupply, by itself. It is here that Family Office investment comes into the picture. It is accompanied by a US$1tn-plus investment in reducing its dependence on oil, diversifying its economy, developing public service sectors and encouraging inward investment. The Middle East's association with oil production primarily comes from countries like Saudi Arabia, Iran, Iraq, and Kuwait. Some families, who already have large deployable reserves, have also created Special Purpose Acquisition Companies (SPACs) as sole enterprises or as part of joint ventures as they seek the returns desired over the next 12 to 18 months. Six Gulf oil-producing countries (Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and the United Arab Emirates) are planning on introducing a sales tax for the first time amid the drop in prices and as they see budget surpluses turn into deficits as oil revenues drop. Global Oil Markets Private capital & hedge fund core services, The Middle East prepares for life after oil, Independent directorship and fiduciary services, CLO / Bank debt agency and administration services, Private Capital & Hedge Fund Services overview ›, Modern slavery act transparency statements. A few years ago, before the oil crisis of 1973-74, Walter Levy wrote in these pages about "oil power. We operate in both the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), offering a full suite of services in most of the free zones and assisting with mainland entities. Middle East & Africa Jul 18th 2020 edition. But that's cold comfort for the oil producers, however, which have seen prices fall from $114 a barrel in June 2014 to current levels. Oman is the latest to follow suit and will introduce VAT from April 2021. … I think it was Mr (Winston) Churchill who said 'never let a good crisis go to waste'. Before Covid-19, commercial and residential real estate was an extremely popular asset class for Intertrust Group’s Middle East clients, many of whom were attracted by capital appreciation and solid returns. It's not something we can wait for anymore, not just because oil prices have dropped but for many reasons.". The Mideast's Biggest Oil Producers . Saudi Arabia, the de facto leader of oil producing group OPEC, has been largely blamed for the continued fall in prices given the group's decision not to cut production amid a glut in supply as part of a strategy to pressure non-OPEC rivals who have higher production costs. Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates produce more than 25 million barrels a day. As oil prices continue to wallow at lows not seen for more than decade, petroleum exporting countries in the Middle East are looking to reform their economies so that they can weather the shock of far lower oil revenues – and prepare for a future after fossil fuels. Governments and wealthy families are accelerating the changes needed to safeguard their financial future. He said Bahrain and its neighbors could, and were, embracing fiscal and economic diversity and investing in more infrastructures in their countries. Privately-owned assets there were expected to reach US$11.8tn at the end of 2020, with the UAE, Saudi Arabia and Kuwait accounting for over 22% of that, according to Boston Consulting Group, quoted in the Global Finance – Middle East and North Africa: Wealth Shift June 2019 report. Well, the majority of the Middle East’s oil comes from just six countries. The policy has hurt producers closer to home though. 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