The United Arab Emirates (UAE) is the world’s eighth largest oil producer, and the third largest in the Middle East after Saudi Arabia and Iraq. Its oil wealth has led to rapid GDP growth. However, being dependent on oil resources also comes with risks, and can cause a country’s economy to fluctuate according to the oil price. This is often referred to as the resource curse, whereby a country focuses too much of its production in a single industry, not diversifying investments in other sectors. Has the UAE managed to escape the resource curse? Refresh this chart in your browser | Edit

The price of North Sea Brent Crude oil has fallen this month, down 8% from a peak on 5 July. The main driver of the price decrease was weak global demand, in particular from China, the world’s largest importer, representing 15% of the IEA’s forecast of global crude oil production in 2023. China’s imports of crude oil (by volume) were down 9% in May and 11% in June compared to the year before. Additionally, Chinese refiners are cutting back production amidst weak economic growth and a housing crisis that has decreased demand for oil used in construction. The country’s total

Middle East oil-producing countries are looking to diversify their economies away from oil ahead of the net-zero transition, through a mixture of tourism, sport, technology and efforts to become major transport hubs of the future. Saudi Arabia can be included among this number. However, the country has struggled to maintain consistent increases in the average standard of living, as measured through GDP per capita. There are issues comparing long-run data on GDP per capita in the Kingdom (last year’s census caused major revisions to the population data between 2010 and 2022). Nonetheless it is undeniable that the average standard of

In a prior note (U.S. Oil Production and Capex Expected to Rise, June 20, 2022), we look at the energy industry from a production and capital expenditure perspective.  U.S. President Joe Biden has called upon the industry to increase both oil production and refining capacity. In this note, we focus on the latter as refineries play a key role in the lifecycle of a barrel of oil by converting it into refined products including gasoline, diesel, and jet fuel. Exhibit 1 highlights the U.S. refining system at an aggregate level.  As of May 2022, refining capacity stands at 17.9 million

U.S. President Joe Biden has criticized oil majors for not stepping up to help combat record-high gasoline prices at the pump.  In his latest remark, he highlighted that many oil companies have made record levels of profit and according to Refinitiv I/B/E/S estimates, 2022 looks to be a banner year for the energy sector. Exhibit 1 highlights the net profit margin for the S&P 500.  Energy is expected to post a record-high profit margin of 11.7% followed by 10.7% in 2023, both expected to be the highest margin in over a decade in large part to a sustainable sharp rise

U.K. large-cap equities continue to be resilient in the face of multiple headwinds, as the FTSE 100 is the third strongest performer year-to-date.  The index is up 4.7%, only behind to the Brazil Bovespa Index (+9.1%) and OMX Oslo All-Share Index (+10.5%). We note possible reasons for relative outperformance in a prior note which include index composition (higher tilt towards value), attractive valuations and higher dividend yields (A Case for U.K. Equities: Valuation and Yields Look Attractive, March 31, 2022).  However, we note that small-cap companies have underperformed as the FTSE 250 has declined 9.2% year-to-date in the face of

U.K. equities have generally underperformed its global peers consistently over the last decade.  The FTSE All Share has experienced a compound annualized growth rate (CAGR) of 4.7% and 7.3% over the last 5 and 10 years respectively.  In comparison, the Russell 1000 CAGR over this same period is 16.5% and 14.9%, while the Datastream World Market CAGR is 11.1% and 9.9% respectively. The start of 2022 has been one of the most volatile on record which we highlight in a prior note (Data Insight: A Turbulent Start to the Year for Global Equities, January 27, 2022).  To this point, the

In this ‘Product Insight’, we look at how correlation coefficients can potentially ‘break down’ during periods of extreme volatility. Refinitiv Datastream allows users to users to access a library of ‘functions’ which provide cloud-based calculations that are delivered instantly into either excel or charting environments.  A library of approximately 85 functions span across categories including logical, mathematical, statistical, and technical to name a few. For correlation, we need to use the CORR# function: CORR#(Variable1,Variable2,Period/frequency). While straightforward to use within the product, interpreting the end output can be challenging depending on the inputs used.  Certain considerations a user must consider include:

Commodities have been at the forefront of global markets for over a year now given its meteoric rise and its key role in supply chains during times of extreme market turmoil. The Refinitiv/Core Commodity CRB® has significantly outperformed global equities in 2021 and 2022, up 38.5% and 26.7% respectively vs. 16.1% and -11.1% for global equities.  The last time commodities outperformed global equities in a consecutive two-year period where returns were positive for both asset classes were back in 2004-2005. The Refinitiv/Core Commodity CRB® Index represents 19 commodities grouped into four major category weights including Energy (39%), Agriculture (34%), Metals

The Oil & Gas Equipment & Services sub-industry kicked off 21Q4 earnings season for the S&P 500 Energy sector. We take a closer look at this sub-industry as it can be viewed as a leading indicator as to how the larger Exploration & Production sub-industry performs in the coming weeks.  The Energy sector will be a key focus this quarter as highlighted in a previous post (S&P 500 21Q4 Preview: Another Quarter of Double-Digit Growth on Tap, January 11, 2022), where we highlight that the sector is currently expected to contribute 8.12 percentage points (ppt) to the overall 21Q4 index

The 2021 United Nations Climate Change Conference (COP26) is scheduled to take place from Oct. 31 to Nov. 12 in Glasgow, Scotland. Therefore, we take a closer look at carbon emission levels within the United Kingdom. For this analysis, we look at Refinitiv ESG data for the current constituents of the FTSE 350 index (as of Sep. 30), which comprises the largest U.K. publicly listed companies by market capitalization and is home to many of the largest commodity companies globally. Using Refinitiv ESG data, we can extract the total Carbon Dioxide Equivalent Emissions (will be referred to as CO2) as

U.S. consumers are paying record levels for gasoline according to the Energy Information Administration (EIA).  Average gasoline prices across the country are $3.17 per gallon, up 45.7% since last year and are currently at a 7-year high. Even with oil prices hovering around $70 per barrel, demand for gasoline has also recovered from pre-pandemic levels.  According to the EIA, gasoline demand is approximately 9.1 million barrels per day (bpd), up from 5.8 bpd in May 2020. Last week, The White House recommended that OPEC increase oil production to curb gasoline prices for consumers.  OPEC has already announced a series of