A weaponized hashtag and fake Twitter accounts seek to blame the small Gulf nation for the spread of COVID-19
The ongoing blockade of Qatar by its neighbors is being further intensified by a new round of disinformation blaming the Gulf country for the spread of COVID-19.
Last week, Noura Almoteari — a Saudi Arabia-based journalist — posted on Twitter, saying that Qatar has known about the existence of COVID-19 since 2015. Earlier this month, she accused Doha of paying billions to China “to grow the virus.” She also coined the Twitter hashtag “Qatar is corona,” which has now been used hundreds of times on the platform. Almoteari stated that the country was spreading the virus in order to damage both the UAE’s upcoming Expo 2020 and Saudi Arabia’s future plans to diversify into a post-oil economy.
In addition to this, Qatar has come under attack from Twitter bot accounts that blame the country for the coronavirus outbreak. In January and February, numerous fake Twitter profiles advanced the theory that Qatar was responsible for spreading the virus to Argentina. The accounts have since been suspended.
In today's disinformation weirdness: New accounts created in Feb 2020 and Jan 2020 featuring pictures of attractive women are saying Qatar has been negligent in spreading #coronavirus to Argentina. What's also weird is their overlap with BTS fandom. Seeing a lot of this. pic.twitter.com/XEsj7CdCyn
The land, sea and air blockade of Qatar began in June 2017, when Saudi Arabia, the United Arab Emirates, Egypt and Bahrain severed diplomatic links with the gas-rich country, after years of rancor over Doha’s foreign policy.
The blockading quartet issued a list of demands, which seemed designed to turn Qatar into a client state. The orders included that Doha cut all ties with the Muslim Brotherhood and other Islamist movements, and that it shutterits media operations, including the broadcaster Al Jazeera.
In the years since the blockade was launched, Qatar has faced repeated accusations from Saudi Arabia and the UAE of supporting terrorism. Armies of Twitter accounts and carefully orchestrated disinformation campaigns have become a prominent and ongoing feature of this diplomatic quarrel.
“The coronavirus campaign against Qatar began online as early as January, long before the current corona outbreak,” said Marc Owen Jones, assistant professor of Middle East Studies and Digital Humanities at Hamad bin Khalifa University in Doha, in a phone interview with Coda Story.
“There were definitely some early disinformation campaigns on Twitter, which were basically saying that Qatar was responsible for the coronavirus, and that it had played a role in spreading it. People are trying to preempt the crisis and exploit it politically.” Subscribe to Coda’s Coronavirus Crisis newsletter
The disinformation campaign has also targeted Qatar’s labor camps — institutions common in Gulf nations, which house thousands of low-paid migrant workers. One Saudi newspaper has published a number of stories about the outbreak of COVID-19 affecting “hundreds” of people in the industrial areas outside Doha, where many of Qatar’s 1.9 million migrant workers live.
Qatar’s Ministry of Public Health says the total number of reported coronavirus cases in the country currently stands at 481.
“I would say this is a continuation of the verbal barrage of misinformation and disinformation that is part of the Qatar blockade,” said Dr Sanam Vakil, a senior research fellow with the Middle East & North Africa Programme at Chatham House in London. “In this current iteration, it accuses the Qataris of spreading the virus. This will continue for quite a degree of time, and these sorts of campaigns are a reflection of how deep seated the tensions are.”
Vakil said the disinformation about Qatar echoed how other countries are trying to internationalize the cause of COVID-19. In recent days, China has sought to blame the U.S.; earlier this month, Bahrain accused Iran of “biological aggression” by covering up the spread of the coronavirus.
“While it is interesting these bots are blaming Qataris, I think it is part of a nationalist impulse that is not just unique to the Gulf in using an external crisis to whip up support,” Vakil added.
Kristian Coates Ulrichsen, author of “Qatar and the Gulf Crisis,” believes that the outpouring of digital disinformation about Qatar on Twitter must at least have the tacit approval of authorities in countries like the UAE and Saudi Arabia, where social media is closely monitored.
“The fact that such comments have been made by high-profile individuals in Saudi Arabia and the UAE without facing any official censure suggests that their messaging carries the implicit approval of authorities, who are in other circumstances extremely quick to police and respond harshly to commentaries that they do not agree with,” he said.
Burhan Wazir is the Managing Editor of Coda Story’s Authoritarian Tech and Disinformation channels. He’s an award-winning journalist and editor, based in London, who previously worked at The Observer, The Times and Al Jazeera. He lived in the Middle East from 2008-2016.
Nasser Saidi describes in a Project Syndicate article The Arab World’s Perfect COVID-19 Storm. The author holds that this recent pandemic analysed here impacts will be significant. It is perhaps the first time that these are equally shared not only throughout the MENA region but the world at large. Any differences will, however, be in the manner with which this pandemic is specifically confronted locally. Read on for a better perspective view of the GCC region’s future.
March 24, 2020
In the face of the COVID-19 pandemic, policymakers in the Gulf Cooperation Council states are rolling out stimulus measures to support businesses and the economy. But the camel in the room remains oil, especially the immediate impact on demand of the Chinese and global economic slowdown.
BEIRUT – Middle Eastern and Gulf Cooperation Council (GCC) economies are heading toward a recession in 2020 as a result of the COVID-19 pandemic, collapsing oil prices, and the unfolding global financial crisis.
The fast-spreading global pandemic – with Europe its new epicenter – is generating both supply and demand shocks. The supply shock results from output cuts, factory closures, disruptions to supply chains, trade, and transport, and higher prices for material supplies, along with a tightening of credit. And the aggregate-demand shock stems from lower consumer spending – owing to quarantines, “social distancing,” and the reduction in incomes caused by workplace disruptions and closures – and delayed investment spending.
The two largest Arab economies, Saudi Arabia and the United Arab Emirates, are proactively fighting the spread of COVID-19, for example by closing schools and universities and postponing large events such as the Art Dubai fair and the Dubai World Cup horse race. Likewise, Bahrain has postponed its Formula One Grand Prix.
Saudi Arabia has even announced a temporary ban on non-compulsory umrah pilgrimages to Mecca, and has closed mosques. Because religious tourism is one of the Kingdom’s main sources of non-oil revenue, the umrah ban and likely severe restrictions on the obligatory (for all Muslims) hajj pilgrimage will have a large negative impact on economic growth.
True, policymakers across the GCC are rolling out stimulus measures to support businesses and the economy. Central banks have focused on assisting small and medium-size enterprises by deferring loan repayments, extending concessional loans, and reducing point-of-sale and e-commerce fees. And GCC authorities have unveiled stimulus packages to support companies in the hard-hit tourism, retail, and trade sectors. The UAE has a consolidated package valued at AED126 billion ($34.3 billion), while Saudi Arabia’s is worth $32 billion and Qatar’s totals $23.3 billion. Moreover, policymakers are supporting money markets: Bahrain, for example, recently slashed its overnight lending rate from 4% to 2.45%.
But the camel in the room remains oil, especially the immediate impact on demand of the Chinese and global economic slowdown. The International Energy Agency optimistically estimates that global oil demand will fall to 99.9 million barrels per day (bpd) in 2020, about 90,000 bpd lower than in 2019 (in the IEA’s pessimistic scenario, demand could plunge by 730,000 bpd). Indeed, successive production cuts had already led to OPEC’s global market share falling from 40% in 2014 to about 34% in January 2020, to the benefit of US shale producers.
The weakening outlook for oil demand has been exacerbated by the Saudi Arabia-Russia oil-price war, with the Saudis not only deciding to ramp up production, but also announcing discounts of up to $8 per barrel for Northwest Europe and other large consumers of Russian oil. Although the Kingdom’s strategic aim is to weaken shale-oil producers and regain market share, the price war will also hit weaker oil-dependent economies (such as Algeria, Angola, Bahrain, Iraq, Nigeria, and Oman), and put other major oil producers and companies under severe pressure. Indeed, in the two years after oil prices’ last sharp fall, in 2014, OPEC member states lost a collective $450 billion in revenues.
That episode prompted GCC governments to pursue fiscal consolidation by phasing out fuel subsidies, implementing a 5% value-added tax (in the UAE, Saudi Arabia, and Bahrain), and rationalizing public spending. Nonetheless, GCC countries continue to rely on oil for government revenues, and their average fiscal break-even price of $64 per barrel is more than double the current Brent oil price of about $30 per barrel. The UAE and Saudi Arabia have estimated break-even prices of $70 and $83.60, respectively, while Oman ($88), Bahrain ($92), and Iran ($195) are even more vulnerable in this regard. More diversified Russia, by contrast, can balance its budget with oil at $42 per barrel.
The near-halving of oil prices since the start of 2020, the sharp fall in global growth, and the effects of the COVID-19 pandemic will put severe strains on both oil and non-oil revenue. As a result, GCC governments’ budget deficits are likely to soar to 10-12% of GDP in 2020, more than double earlier forecasts, while lower oil prices will also result in substantial current-account deficits.
Governments will respond by cutting (mostly capital) spending, magnifying the negative effect on the non-oil sector. Some countries (Kuwait, Qatar, and the UAE) can tap fiscal and international reserves, while others (Oman, Bahrain, and Saudi Arabia) will have to turn to international financial markets.
But will GCC governments be able to borrow their way out of this phase of lower oil prices? Global equity and debt markets currently are close to meltdown; with investors fleeing to safe government bonds, liquidity is drying up.
The GCC countries will suffer a negative wealth effect, owing to losses on their sovereign wealth funds’ portfolios and net foreign assets. And, given bulging deficits and the prospect of continued low oil prices, sovereign and corporate borrowers will find it harder and more expensive to access markets. The ongoing financial crisis will therefore exacerbate the effects of the oil-price shock and the pandemic.
The pandemic itself is still unfolding, and its eventual global impact will depend on its geographical spread, duration, and intensity. But it is already clear that in the coming weeks, there will be heightened uncertainty about global growth prospects, oil prices, and financial-market volatility. And as the pandemic continues its deadly march, the GCC economies – like many others – will be unable to avoid recession.
Space cooling and heating is a common need in most inhabited areas. In Europe, the energy consumed for air conditioning is rising, and the situation could get worse in the near future due to the temperature increase in different regions worldwide. The increasing cooling need in buildings especially during the summer season is satisfied by the popular air conditioners, which often make use of refrigerants with high environmental impact and also lead to high electricity consumption. So, how can we reduce the energy demand for building cooling?
A new study comes from a research group based at the Politecnico di Torino (SMaLL) and the National Institute of Metrological Research (INRiM), who has proposed a device capable of generating a cooling load without the use of electricity: the research has been published in Science Advances*. Like more traditional cooling devices, this new technology also exploits the evaporation of a liquid. However, the key idea proposed by the Turin researchers is to use simple water and common salt instead of chemicals that are potentially harmful for the environment. The environmental impact of the new device is also reduced because it is based on passive phenomena, i.e. spontaneous processes such as capillarity or evaporation, instead of on pumps and compressors that require energy and maintenance.
“Cooling by water evaporation has always been known. As an example, Nature makes use of sweat evaporation from the skin to cool down our body. However, this strategy is effective as long as air is not saturated with water vapour. Our idea was to come up with a low-cost technology capable to maximize the cooling effect regardless of the external water vapour conditions. Instead of being exposed to air, pure water is in contact with an impermeable membrane that keeps separated from a highly concentrated salty solution. The membrane can be imagined as a porous sieve with pore size in the order of one millionth of a meter. Owing to its water-repellent properties, our membrane liquid water does not pass through the membrane, whereas its vapour does. In this way, the fresh and salt water do not mix, while a constant water vapour flux occurs from one end of the membrane to the other. As a result, pure water gets cooled, with this effect being further amplified thanks to the presence of different evaporation stages. Clearly, the salty water concentration will constantly decrease and the cooling effect will diminish over time; however, the difference in salinity between the two solutions can be continuously – and sustainably – restored using solar energy, as also demonstrated in another recent study from our group**”, explains Matteo Alberghini, PhD student of the Energy Department of the Politecnico di Torino and first author of the research.
The interesting feature of the suggested device consists in its modular design made of cooling units, a few centimetres thick each, that can be stacked in series to increase the cooling effect in series, as happens with common batteries. In this way it is possible to finely tune the cooling power according to individual needs, possibly reaching cooling capacity comparable to those typically necessary for domestic use. Furthermore, water and salt do not need pumps or other auxiliaries to be transported within the device. On the contrary, it “moves” spontaneously thanks to capillary effects of some components which, like in kitchen paper, are capable of absorbing and transporting water also against gravity.
“Other technologies for passive cooling are also being tested in various labs and research centres worldwide, such as those based on infrared heat dissipation into the outer space – also known as radiative passive cooling. Those approaches, although promising and suitable for some applications, also present major limitations: the principle on which they are based may be ineffective in tropical climates and in general on very humid days, when, however, the need for conditioning would still be high; moreover, there is a theoretical limit for the maximum cooling power. Our passive prototype, based instead on evaporative cooling between two aqueous solutions with different salinities, could overcome this limit, creating a useful effect independent of external humidity. Moreover, we could obtain an even higher cooling capacity in the future by increasing the concentration of the saline solution or by resorting to a more sophisticated modular design of the device” commented the researchers.
Also due to the simplicity of the device assembly and the required materials, a rather low production cost can be envisioned, in the order of a few euros for each cooling stage. As such, the device could be ideal for installations in rural areas, where the possible lack of well-trained technicians can make operation and maintenance of traditional cooling systems difficult. Interesting applications can also be envisioned in regions with large availability in water with high saline concentration, such as coastal regions in the vicinity of large desalination plants or nearby salt marshes and salt mines.
As of now, the technology is not yet ready for an immediate commercial exploitation, and further developments (also subject to future funding or industrial partnerships) are necessary. In perspective, this technology could be used in combination with existing and more traditional cooling systems for effectively implementing energy saving strategies.
[*] Matteo Alberghini, Matteo Morciano, Matteo Fasano, Fabio Bertiglia, Vito Fernicola, Pietro Asinari, Eliodoro Chiavazzo. Multistage and passive cooling process driven by salinity difference, SCIENCE ADVANCES (2020), URL: https://advances.sciencemag.org/content/6/11/eaax5015
[**] Eliodoro Chiavazzo, Matteo Morciano, Francesca Viglino, Matteo Fasano, Pietro Asinari, Passive solar high-yield seawater desalination by modular and low-cost distillation, NATURE SUSTAINABILITY (2018), URL: https://www.nature.com/articles/s41893-018-0186-x
Covid-19 may have given North African governments a respite from protests, but this is unlikely to last long.
March 23, 2020
In the short term, the Covid-19 pandemic is likely to provide the governments of Morocco, Algeria, and Tunisia with a respite from political contestation and mobilization. They have all struggled to varying degrees recently with popular dissent and challenges to their legitimacy. But in the long run, as each grapple with the economic and political aftershocks of the virus, the same questions of credibility and efficiency are likely to come back with renewed vigor.
The number of confirmed Covid-19 cases has been limited in North Africa, despite the region’s proximity to Europe. As of March 20, according to the Johns Hopkins Coronavirus Resource Center, Morocco had 77 recorded cases, Algeria 90, and Tunisia 54. Recognizing the vulnerability of their strained healthcare systems, the governments in the three countries responded early and aggressively to the new situation. They sealed their borders, limited social movement, and urged citizens to practice social confinement. All have closed down public spaces, including educational institutions, places of worship, cafes, and public transport. They have also asked non-essential public-sector workers to stay home.
All three countries fear that a pandemic would overwhelm them, as they lack the infrastructure or resources, or both, to respond to an outbreak. In Algeria, there are only 1.9 hospital beds per 1,000 people, compared to a global average of 2.7. In Morocco the figure is 1.1. And in Tunisia, which is closest to the global average, the number is 2.3. In comparison, it is 2.9 in the United States and 13.4 in Japan. While North African countries boast younger populations potentially less affected by the disease, 6.7 percent of the population in Algeria is over 65. In Morocco it is 7.1 percent. And in Tunisia it is 8.8 percent.
With regard to mitigating the economic impacts of Covid-19, responses have varied. Looking at border closures alone, Morocco and Tunisia must grapple with the significant economic losses likely to result from a cratering tourism sector. In Morocco and Tunisia, tourism contributes 19 percent and 15.9 percent to GDP, respectively.
The Moroccan government has created a fund to address the crisis. The fund was initially 10 billion dirhams, or $1 billion, mostly to supplement the needs of the healthcare sector. Given its limited budget, the state encouraged donations from businesses and private citizens, which helped raise the sum to 27 billion dirhams, roughly $2.7 billion. Moroccans were heartened and incredulous at the speed and generosity of the donations. The state has indicated it would support exposed sectors and has begun putting in place mechanisms to compensate some of the most vulnerable and affected citizens.
Algeria has taken similar steps, providing paid leave for mothers, preventing price gouging, and speeding up the importation of foodstuffs to avoid shortages. Algeria is something of an outlier in that its energy-dominated economy has never depended on tourism or manufacturing.
In Tunisia, the government put in place a fund through public donations to combat the virus. The fund has so far brought in around 4 million dinars, or $1.36 million. On March 21, Tunisian Prime Minister Elias Fakhfakh announced a number of economic measures and an aid package to struggling businesses and industries. But the country’s economic challenges, with limited economic growth, high unemployment, high public-sector expenditures, and low GDP growth, make the strain of Covid-19 even greater to bear. Tunisia is bracing for an unprecedented hit.
Painful economic fallout will once again taint confidence in these governments. Each of the three countries has faced sustained political contestation in recent years. This has largely been in the form of protests calling for a new political system in Algeria and more accountability in Morocco and Tunisia. All have been driven by the socioeconomic grievances that have shaped the region since, and even before, 2011. However, in a time of great uncertainty, as today, fear has pushed people to accept existing political structures as a source of certainty and strength, creating a sense of solidarity that has given governments a respite. It has deflated the opposition and limited the public’s desire to push for change.
As the aftereffects of the Covid-19 pandemic become clearer, they are likely to bring to the fore the policy failures that made the North African nations so fragile and susceptible to the virus in the first place. Economic mismanagement and underinvestment in infrastructure and human development have resulted in systems characterized by inequality and social precariousness. The governments of the three countries might be able to reinvent themselves in the short term, but beyond that the consequences of their errors are potentially destabilizing.
While Italy passed the 4,000-death mark yesterday Friday as part of the coronavirus pandemic, the U.S. state of New York, after California, declared total containment of its population. At the same time, more than 800 million people instructed to stay at home in the world would include those of the MENA region as described by Omar Akour and Nasser Karimi. These inform that Jordan goes on virus lockdown as Iran’s death toll mounts.
AMMAN, Jordan (AP) — Air raid sirens echoed across Jordan’s capital Saturday to mark the start of a three-day curfew, the latest mass lockdown in the Middle East aimed at containing the coronavirus, which has claimed another 123 lives in Iran, home to the region’s worst outbreak.
In one of the strictest measures yet, Jordan has ordered all shops to close and all people to stay off the streets until at least Tuesday, when it plans to announce specific times for shopping. Anyone caught violating the curfew faces up to one year in prison.
Several countries in the Middle East have closed schools, universities and nonessential businesses. Many are threatening fines or jail time to those caught violating the decrees.
Egypt announced that all museums and archaeological sites, including the famed pyramids at Giza, would be closed from Monday until the end of March. Mostafa Waziri, head of the Supreme Council of Antiquities, said authorities would sterilize all sites during the closure.
Egypt also announced the temporary suspension of Friday prayers and other congregations in all mosques. The Coptic Orthodox Church canceled all services and wedding parties, and said funeral processions would be limited to family members of the deceased.
Egypt has reported 285 cases and eight deaths, and there are increasing calls for a curfew. The most populous Arab nation is home to more than 100 million people. Cairo, the capital, is one of the most densely populated cities on earth, with more than 20 million residents.
Iran has been much slower to take action against the virus. It has urged people not to travel during the Persian New Year, a major national holiday, but many appear to be ignoring the guidance. Health Ministry spokesman Kianoush Jahanpour said the number of cases has increased in many popular tourist destinations.
Iran has not ordered businesses to close, though many have done so on their own. Authorities only began closing popular religious pilgrimage sites earlier this week, long after the first virus cases were detected. There are concerns the country’s health care infrastructure, weakened by severe U.S. sanctions, could be overwhelmed.
Most people only experience minor flu-like symptoms from the coronavirus and recover within a few weeks, but the virus is highly contagious and can be spread by those who appear well. It can cause severe illness, including pneumonia, in some patients, particularly the elderly and those with underlying health problems.
More than 275,000 people have been infected worldwide. The virus has killed more than 11,000 people, while more than 88,000 have recovered.
Saturday is Mother’s Day in the Middle East, and many took to social media to lament the fact that they would not be able to visit family members. Others thanked mothers who spent the holiday working as doctors or nurses at hospitals. One popular online greeting card praised mothers as the original advocates of hand-washing.
In Iraq, Lt. Gen. Othman al-Ghanimi, the army chief of staff, ordered a 50% reduction in on-duty personnel. Officers already on leave were instructed not to return until March 31, and women were granted extended leave. The military said all officers returning to duty would undergo medical tests.
Iraq, which has reported 193 cases and 14 deaths from the coronavirus, is still battling remnants of the Islamic State group.
In war-torn Syria, which has yet to report any cases, the military said it was distributing masks and gloves to soldiers and suspending group sports as a precautionary measure. It said it was also suspending all recruitment — as well as penalties for those avoiding mandatory conscription — until April 22.
In the United Arab Emirates, the country’s National Media Council announced a temporary ban on “the distribution of all print newspapers, magazines and marketing material” beginning Tuesday, saying it was a measure to stop the spread of the virus. It said subscribers and shopping center outlets would be exempt.
Dr. Farida al-Hosani, a spokeswoman at the Ministry of Health and Prevention, separately asked the public to stay away from malls and restaurants, which remain open in the UAE.
The tiny, energy-rich nation of Qatar meanwhile warned citizens and residents to honor home quarantine rules. The state-run Qatar News Agency said authorities “captured 10 people” who broke the rules. It said those who disobey the orders could face prosecution.
In the Israeli-occupied West Bank, Palestinian security forces arrested 20 Muslim preachers for allegedly violating a ban on holding Friday prayers, the Voice of Palestine reported. The Palestinian Authority, which governs parts of the West Bank, has closed mosques and barred all group prayers.
Abdallah Kmail, the governor of Salfit, said a village in the northern West Bank was locked down after a man who returned from Pakistan and tested positive for the virus participated in prayers held in violation of the ban. The man was an adherent of Salafism, an ultra-conservative interpretation of Islam, Kmail told the Voice of Palestine.
The Palestinian Authority has reported 52 confirmed cases, including 17 who recovered. Jordan has reported 85 infections, including one who recovered. Qatar has reported 460 cases, including 10 who recovered.
Even the authorities in eastern Libya, who have yet to report any cases, suspended all public transportation and ordered the closure of nonessential businesses. The government there is allied with Khalifa Hifter, whose forces control much of the war-torn country.
Karimi reported from Tehran, Iran. Associated Press writers Joseph Krauss in Jerusalem, Mohammed Daraghmeh in Ramallah, West Bank; Samy Magdy in Cairo; Sarah El Deeb in Beirut; Samya Kullab in Baghdad and Jon Gambrell in Dubai, United Arab Emirates, contributed.
The Associated Press receives support for health and science coverage from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.
Saudi Arabia abruptly altered its oil production strategy in early March and began to flood the market with cheap oil. Financial markets worldwide haemorrhaged value at the prospect of a protracted and painful price war, and American oil firms immediately cut back spending and dividend payments as the price for their primary product halved. As of this morning, WTI Crude (a pricing benchmark tied to U.S. supply) was barely north of $20/bbl, prices not seen since 2002.
This sudden tumult represents an opportunity for the renewable energy sector. At first glance, this may sound counterintuitive. After all, oil prices seem largely unrelated to the prospects of wind, solar, and other renewables in the electricity generation sector, because in the United States the primary fossil source of electricity is natural gas. Natural gas prices have been largely uncorrelated with the price of oil since 2007, when large-scale domestic shale-gas production began to come online (see chart). In other parts of the world, coal drives electricity generation, which is similarly decoupled. Virtually nobody uses oil as a primary electricity source, except in certain very specific locations, such as Hawaii, where the demands of unique geography and supply logistics align to make oil the best bet for power production.
Oil’s link to renewables instead comes through competition in the financing marketplace. As new projects are developed and financing is sought, the infrastructure funds that provide capital to enable these developments naturally prefer projects that promise the most attractive financial returns. With relatively high prices over the last decade and unmatched value as a transportation fuel, oil exploration has beaten out renewable project development on the financial metrics time after time.Today In: Energy
The oil shocks over the last weeks could dramatically alter that calculus. Revenues for potential oil projects have suddenly dropped by over 50%, and futures contracts currently show only a modest improvement in prices by year’s end. The market is already pricing in the expectation that oil prices remain below $40/bbl for the foreseeable future, a dramatic change from the $55+/bbl that has been the norm for the last few years.
Even if prices do recover, the sudden volatility will still weigh on the minds of project investors. Oil markets haven’t resembled a purely competitive market since the mid-1960s, and since that time prices have been regularly impacted by sudden and unforeseen changes in supply by OPEC producers, primarily Saudi Arabia. The rise in shale-oil in the U.S. in the last decade has effectively put a cap on prices and provided a counterweight to OPEC’s pricing power. But the muscle being flexed now shows that the OPEC nations and Russia still maintain substantial influence over the fate of American oil producers. This ‘stroke of the pen’ risk, now that it has again bared its head, maybe unlikely to be forgotten in the near future.
Renewables, by contrast, have no supply risk whatsoever, and are primarily exposed to fluctuations in the price of electricity. Insomuch as this relates to the price of natural gas, investors in the U.S. will take comfort knowing gas is essentially a local market, with U.S. prices driven by supply and demand within North America; there is little ability to arbitrage against global markets due to limited export capacity. Therefore, as oil prices come down, project financiers should start to turn more of their attention to the new safe bets that offer more durable returns: wind, solar, and the like.
This isn’t to say that renewables don’t face headwinds in the current environment. Cheap oil also competes with renewables in the transportation sector. Electric Vehicles will be less competitive with their gasoline-powered cousins as the price for gasoline at the pump drops, lowering demand for new grid capacity and forcing renewables to wait for retirements of current assets. The price for natural gas in the U.S. is dropping as well, driven primarily by the sudden decrease in demand due to the shuttering of entire industries. These drops make fossil power from natural gas more competitive with their renewable counterparts.
Futures markets, however, are currently pricing in a full rebound of natural gas prices by year’s end, with the futures contract for Henry Hub for December 2020 currently priced above market levels at the end of 2019. This suggests that the drop in prices of natural gas will be temporary, and investors making long-term bets do not view the current situation as durable. Further, natural gas prices are just one component of the price paid by utilities to power producers, and so a drop in natural gas prices doesn’t necessarily imply a similar fall in the rates negotiated in new power purchase agreements. So the drop in natural gas prices evident in the market now looks to be temporary, and unlikely to dramatically alter the widespread conclusion that renewables are now the cheapest power source to build.
Altogether, the oil market has changed dramatically in the last three weeks, in ways unforeseen just a few short months ago. But despite the headlines and worrying drops across financial markets, opportunity lies in these disruptions. Renewables are well positioned to capitalize.
Brentan Alexander‘s words: I am the Chief Science Officer and Chief Commercial Officer at New Energy Risk, where I lead the detailed diligence of novel technologies and business models across the energy landscape. I have devoted my career to advancing solutions to the climate crisis and use my experience to help technology companies assemble everything they need to reach the market faster. I hold a PhD in Mechanical Engineering from Stanford University, where I studied gasification, thermochemistry, and electrochemistry, and Masters and Bachelors degrees in Mechanical Engineering from the Massachusetts Institute of Technology. When I’m not in the office, you can find me hiking the hills outside Oakland, California, or turning wood in the shop. All of my articles reflect my personal views and not those of my employer nor the volunteer initiatives that I am involved in. You can find out more about me via my website (brentanalexander.com) or follow me on Twitter or LinkedIn.
Nation will be able to finance current account deficit for 35 years even with prices this low
The UAE is best-positioned among GCC economies to weather the decline in oil prices as it can finance its current account deficit longer than any of its regional peers, says a new report.
According to Capital Economics, the UAE can finance its current account deficit for 35 years if oil prices stay at $25 a barrel. Kuwait comes second followed by Qatar, Saudi Arabia, Bahrain and Oman.
“In the four largest Gulf economies – Saudi Arabia, the UAE, Kuwait and Qatar – current account deficits could be financed through a drawdown of large foreign exchange savings for a considerable amount of time. Saudi Arabia could do so for around a decade and the other three countries for even longer,” said Jason Tuvey, senior emerging markets economist at
Capital Economics. The report said the UAE still runs a current account surplus at $30 a barrel.
Brent crude was trading down $3.37, or 12 per cent, at $25.35 a barrel by 1720GMT after dropping as low as $25.23, its weakest since 2003. US crude was down $5.19, or 19 per cent, at $21.76. The session low was the lowest since March 2002.
Data showed that UAE-based sovereign wealth funds held over $1.21 trillion worth of assets in August 2019 compared to $825.76 billion by Saudi Arabia, $592 billion by Kuwait, $320 billion by Qatar and $22.14 billion by Kuwait.
Oil prices have plummeted over the last few weeks, firstly due to coronavirus and then the collapse of Opec+ talks on production cuts. Brent has dropped 45 per cent in the past month from $57.60 a barrel on February 17 to $31.60 on March 17.
Tuvey noted that large foreign exchange savings provide substantial buffers and the likes of Bahrain and Oman, which are most vulnerable to a period of low oil prices, and can probably rely on financial support from their neighbours to avert devaluations.
He said dollar pegs in Bahrain and Oman are more vulnerable, with foreign exchange savings only able to cover current account shortfalls for a couple of years at most. Bahrain secured a $10 billion financing package from its neighbours in mid-2018.
In recent days, GCC governments have stepped up fiscal support in order to mitigate the economic hit from efforts to contain the virus. “If oil prices stay low even after the virus fears have subsided, austerity will come on to the agenda and this means that an eventual recovery in non-oil sectors will be slow-going,” he said.
Khatija Haque, head of Mena research at Emirates NBD, has said that the UAE posted a budget surplus of Dh37 billion ($10 billion) in 2019 and is well-positioned to withstand lower oil prices in 2020.
“If we strip out volatile oil revenues, we estimate the UAE’s non-oil budget deficit narrowed to just under 20 per cent of non-oil GDP, down from 27 per cent of non-oil GDP in 2015, and pointing to a tightening of fiscal policy in recent years,” Haque said.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, said the sharp fall in oil prices and the outlook for a price war adds significant downside risks to the economic outlooks of GCC countries.
“We estimate that all GCC countries will realise a significant fiscal deficit at the current oil price of $37 per barrel, with Oman and Saudi Arabia seeing particularly significant shortfalls relative to GDP. A weaker oil revenue backdrop will require a meaningful pull-back in government spending, as was the case in 2015 and 2016, to limit the size of the fiscal deficit,” Malik said.
She sees a forecasted increase in output from Saudi and Russia and the changing dynamics of oil market fundamentals will likely bolster global oil stocks significantly in 2020. A number of oil-importing countries are also likely to accumulate inventories at the current low price levels, which in turn would lower oil demand during second-half of 2020.
Furthermore, the outlook for inventories beyond 2020 will depend on global demand and coronavirus-related developments in the coming months, she added.
Edward Bell, commodity analyst at Emirates NBD Research, has said that dust has not entirely settled yet caused by travel restrictions and lockdowns due to coronavirus.
Oman’s Ministry of Technology and Communications (MTC) has committed to a memorandum of cooperation (MoC) with BankDhofar at the Sas Center for the 4th Industrial Revolution (4IR), in order to manage a technology innovation lab at the center.
The MoC was reportedly signed by Dr Salim bin Sultan Al Ruzaiqi, CEO at MTC, and Abdul Hakeem Omar Al-Ojaili, CEO at BankDhofar.
The innovation lab has been established to help students and local Fintech startups, as they focus on developing innovative financial technology products and services.
“The Ministry has launched the SAS Center for the 4th Industrial Revolution to keep pace with the current developments in the ICT sector. Signing this MoC with BankDhofar reflects the significant role of the private sector in supporting this dynamic sector and the Omani youth initiatives in entrepreneurship.”
He added that through this cooperation, they aim to create an encouraging environment that can help develop useful Fintech solutions, which could become part of the 4th IR technologies.
He also said the project aims to encourage and support Oman’s private sector organizations to continue to empower the nation’s emerging technology fields.
“The innovative lab at Sas Centre for 4th Industrial Revolution serves our vision of contributing to such projects of national value, and it also contributes to the development of the Fintech field in general.”
“We are in the midst of the 4th Industrial Revolution where the banking sector has to seize the opportunity and take part, supporting the youth and encouraging them to become effective in a field which will positively contribute to the national economic growth in the future.”
MTC and BankDhofar will work cooperatively to establish, host, and manage the innovation lab. They will provide mentorship and training for Omani students, staff, local startups and Fintech firms.
In December 2019, Bank Muscat, the leading financial services provider in the Sultanate, revealed that the Central Bank of Oman had approved the institution’s request to establish a $100 million (appr. OMR38.5 million) nationwide, strategic Fintech investment program.
The investment program is reportedly part of Bank Muscat’s strategic growth initiative.Sponsored Links by DQ Promote
COVID 19 pandemic has created a responsibility for global media, but they’re not meeting it, according to Dr Marc Owen Jones, Assistant Professor in Middle East Studies and Digital Humanities at QF (Qatar Foundation) member Hamad Bin Khalifa University. He argues on why worldwide news coverage of COVID-19 risks adding to public panic. “I would say the global media is being absolutely irresponsible. They haven’t struck a very good balance between not trivializing issue, but also over-sensationalizing it. Everywhere you look, there seems to be this polarity of opinions: it’s either that COVID 19 isn’t so bad and it’s just like flu versus the constant coverage of COVID 19 -related issues, constant reports and numbers about how many new cases there are and where they are. I think this just inflames tensions about the issue,” he said in an email interview with media persons. “I was asked to write a piece recently, and the whole underpinning of this piece was that people are interested in stories. They drive a lot of clicks for advertising revenue, so media corporations that rely on advertising business models basically make money from clicks. And COVID 19 gets a lot of clicks. COVID 19, as well as being a virus, is actually going viral, so I think there is a big problem there,” he added. According to Dr Jones, it’s important to be transparent about any public health issue. The problem is that, often, the reporting of deaths happens as breaking news in big, garish headlines and is top of the news bill every day; that has certainly been the case in recent weeks and months. It’s not so much the reporting of figures that is the issue; it’s the constant reporting of new deaths every day in a way that occupies headlines. “I think this exaggerates the dangers and the impact of coronavirus in people’s heads. There are countless other illnesses or conditions or social issues that result in more deaths, but these are not reported on every day,” he said. It is difficult to determine what is a reliable source of news, said Dr Jones. “It is not always easy. I don’t like to say you should rely on established news media, but in times like this, I do think it’s important to stick with something reputable, Don’t just retweet something you see on social media. Be very clear about whether the news you are reading has some sort of pedigree: is it linked to a well-known news site? Is it quoting, for example, a health official from a public ministry? That is always a good barometer to follow,” he added. Referring to overwhelming information spreading on COVID 19, Dr Jones said that ‘Infodemic’ is a very important term. “We are getting a lot of information from a plurality of sources – too much information. This prevents people from being able to synthesize and process all this information, and what tends to stick in people’s heads is the more dramatic or sensational coverage. Too much exposure to news is more likely to promote a sense of panic, and I think it’s actually healthy to isolate yourself from this infodemic,” he said. According to Dr Jones, there is clearly an impact of relentless coverage of COVID -19 on people’s behaviors, and that it is not constructive. He also said that COVID- 19 has occupied news coverage more than other issues for several reasons. “The absence of anything else substantial in the current news cycle is also perpetuating this. It is a global issue, not a parochial issue affecting one country, so it will be reflected in country’s media. And it captures the imagination. People click on it because they find it fascinating and viscerally scary. And it’s been weaponized, which is contributing to this large media storm around the issue,” said Dr Jones. He also insisted that there needs to be more responsibility in news coverage. Dr Jones said that media should perhaps have an updated set of best practices and recommendations, endorsed by the World Health Organization and public health officials, in a standing location on their web page. “This can be done in an understated way and a way that suggests this is about reporting and not sensationalizing,” he said. “The media has a responsibility to do this because, at the moment, the role they’re playing is to promote panic. Constant breaking news and red ticker tape on many news websites is not helping, and neither is the way coronavirus dominates headlines. The constant repetition of stories about deaths and new cases in bold front-page headlines is a problem,” he added.
OPINION: The epic oil price slump, if prolonged, is bound to prove calamitous for the upstream sector of the financially strapped Middle Eastern and North African producers and those with high production costs.
The consequences will go beyond the energy sector for the more populous nations, where autocratic governments have long used oil windfalls to shield themselves from social unrest through generous handouts and subsidies.
World Bank warning
“As the world struggles with the fear of recession, the Middle East and North Africa could be the hardest hit by what is arguably a perfect storm: the coronavirus spreads to the region and oil prices collapse,” the World Bank says.
“If the decline in oil prices persists, it will erode the fragile macroeconomic and social stability of countries, especially in the Middle East and North Africa, that have been hit by the novel coronavirus.”
Only the wealthy Persian Gulf producers with small populations — such as Qatar, Kuwait and the United Arab Emirates — can be expected to weather a prolonged storm thanks to their enviable financial position.
Iran position precarious
The major losers will primarily be Iran as well as Iraq, Libya Algeria, Oman, and Saudi Arabia.
Iran, whose economy is being seriously squeezed by unprecedented US sanctions against its vital oil sector, will find itself struggling to pay for basic imports as the price collapse will further reduce income from the crude sales achieved through circumventing the stifling sanctions.
Iran’s exports have fallen to a fraction of the 2.5 million barrels per day that the Islamic Republic used to export before May 2018, when US President Donald Trump tore up the landmark 2015 nuclear agreement and imposed draconian punitive measures against the country.
The Iranian Central Bank has just put out an international distress call amid rising cases of the coronavirus outbreak by asking the International Monetary Fund (IMF) for $5 billion in emergency funds to cope with containment.
Iran is fast becoming the global epicentre of the endemic, with more than 500 dead and 11,000 afflicted.
Severe economic problems have led to widespread unrest in the past two years, with the clerical leadership employing heavy-handed tactics to quell dissent.
Iraq set to suffer
Neighbouring Iraq is in the grip of growing political unrest with protesters demanding jobs and end to endemic corruption.
Iraq, Opec’s second-biggest producer, has been without a functioning government for months, disrupting planning and delaying major upstream projects.
Rising tensions between the US and Iran — both of which are fighting for influence in Iraq — have added to the security and political woes.
Algeria, often seen as a hostile destination for international oil companies, will find it difficult to attract fresh investment in the face of the price collapse and social unrest.
Algeria’s Prime Minister Abdelaziz Djerad said the North African country is faced with an unprecedented “multi-dimensional crisis”, while also urging the public to make fewer demands of the government and reduce their presence on the streets.
Libya’s civil war, which has crippled the oil industry, is showing no signs of ending.
Oman has so far been spared social unrest but the future remains bleak since the Persian Gulf sultanate has the highest production costs among regional producers because the bulk of its oil production is ultra-heavy heavy, which needs robust commodity prices in order to compete with other blends.
The oil price rout, arising from the collapse earlier this month of Opec+ talks to persuade Russia to agree to new production curbs, is also a real threat to Saudi maverick ruler Crown Prince Mohammed bin Salman, who has pinned his success as the future king on delivering on an ambitious economic diversification scheme funded by oil money.
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