* Price per litre: Super 98 is AED1.95, Special 95 is AED1.84 and E Plus-91 is AED1.77
* MENA has $337bn worth of committed investment in energy and power projects
* Low oil prices could erdo the economic viability of cleaner energy sources like solar and wind
Fuel prices for the month of April have reduced in the UAE, the Ministry of Energy announced on Tuesday. Starting April 1,the prices per litre will be set at AED1.95 for Super 98, which is down from AED2.03; AED1.84 for Special 95, down from AED1.92; and E Plus-91 at AED1.77, down from AED1.85.
The diesel price has been reduced to AED1.95 per litre from AED2.02. This is the first time in 2017 that fuel prices have decreased.
The collapsing value of oil will have profound consequences around the world, with the potential to destabilise regimes, remake regions and alter the global economy in lasting and unforeseen ways.
Trading and stock markets
Sliding oil prices have continued to weigh in on markets across the Gulf. Last week, Saudi Arabia’s Tadawul closed 1.1 per cent lower, its third consecutive negative close, with Sabic and NCB the main decliner.
Trading in the UAE has been subdued, while investors remaining passive in the absence of catalysts. Shares in Dubai closed down 0.6 per cent at 3,474.73, dragged lower by Dubai Islamic Bank and Emaar Malls. Emirates NBD and DXB Entertainments were the pick of just four gainers. The Abu Dhabi Securities Exchange General Index finished the day 0.7 per cent lower at 4,481.89, with FGB and Etisalat weighing on stocks.
Another concern for the markets is an increasing outlook for US monetary tightening, interest rate futures are now pricing in about a 50 per cent chance of a hike in June. This may support regional banks, mainly Saudi ones that could profit from higher net interest margins but it may impede the Gulf’s economic recovery and dissuade tourist flows and real estate investment in Dubai.
Energy and power projects
A fall in oil prices may lead to scrapping or postponing energy projects that could suddenly become too risky or economically unviable.
Energy and power projects worth $622 billion in MENA and Iran are set to materialise between now and 2021. The Arabian Gulf region is the leading destination for $337bn worth of committed investment in projects under execution in MENA and Iran between now and 2021, according to the Saudi-based multilateral energy lender Apicorp.
Committed energy investments are two per cent higher than last year’s projection for the 2016 to 2020 period, and planned investments are 17 per cent higher, Apicorp said. Of the planned investments, the biggest share goes to power projects with $207bn, followed by oil with $195bn, gas with $159bn and the remainder in petrochemicals.
Projects under study worth $289bn are the largest part of planned investments and 19 per cent of all planned investments are in Saudi Arabia. Of the $337bn projects under execution, oil reigns supreme with $121bn in investments, followed by gas with $108bn, power with $91bn and petrochemicals with $17bn.
In the long-term, a drop in oil prices may lessen oil production and result in higher energy prices. But in the short-term, the loss of such a massive investment flow is bound to damage energy companies, particularly equipment suppliers and the construction and engineering firms that are commissioned to execute these projects.
The MENA region has led the growth of renewable energy with projects such as the Mohammad Bin Rashid Al Maktoum Solar Power Park in Dubai and the NOOR solar power complex in Morocco.
Additionally, Saudi Arabia’s Vision 2030 places renewable energy firmly in the energy mix of the future. It has set its initial production target at 9.5 gigawatts (GW) and aims to build a renewable energy industry that spans from technology origination to production of goods and services.
The problem is that low oil prices are wearing down the economic viability of cleaner energy sources like solar and wind. It could also delay investment into alternative ‘greener’ forms of energy, such as electric cars.
Optimists hope that plunging prices will persuade producers of renewable-energy sources to develop their technologies and production methods, making these sources cheaper and more economically viable. This, in turn, could make renewable energy more commercially attractive once the price of oil recovers.