Business
Oil prices drop to $65 amid trade uncertainty
Kamel Al-Harami
BRENT oil prices dropped to $65 a barrel by the end of Friday, with uncertainty about how much further the decline will continue. This drop is a direct result of the U.S. administration imposing tariffs on all goods imported into the country, ranging from ten percent to as high as 46 percent and 49 percent on goods from Vietnam and Cambodia. This led to huge decline in stock values, sparking panic in global markets as investors brace for the potential fallout on Monday.
In Kuwait and the rest of the Gulf Cooperation Council (GCC) countries, the tariff rate stands at a relatively low ten percent. While trade with the U.S. is limited primarily to oil and gas, which are exempt from the tariffs, the impact of these new import taxes is still being felt. A tariff on oil and gas imports would have disastrous impact for U.S. gasoline consumers, which is why it did not seem to be the right moment for such a measure. OPEC+ finds itself in a difficult position, and is uncertain how to respond. The group recently decided to increase oil production starting next month and is considering pumping even more crude into the market from June onward. The decision aims to protect market share and boost domestic economies by increasing oil revenues. However, with oil prices at $65 a barrel, there seems to be little appetite for further price declines. Even though OPEC+ has made its decision, it might reconsider as the situation evolves. The timing of this move may not be ideal, and we must wait and see how things unfold.
There is limited demand for more oil right now, and inflation is expected to rise, creating an unclear economic outlook. Every country will need to prioritize domestic issues, face inflationary pressures, and tighten their belts. In these uncertain times, everyone needs to tighten their belts and save until the economic picture becomes clearer. Saving and reducing expenses is the wise choice right now. With inflation impacting the global economy, including the USA, which has been at the center of many economic challenges, the future remains unpredictable. Oil prices are expected to decrease, with $60 per barrel potentially being a target if OPEC+ increases production. The next six months will be critical, as countries negotiate and explore new trade alliances. China is expected to emerge as the primary beneficiary of these shifts. Global trade is in turmoil, but this presents an opportunity to reshape the trade map. New global alliances and partnerships will form, with China taking center stage as a major player in world trade.
TWO of the biggest American oil companies, ExxonMobil and Chevron, are locked in a legal battle over an oilfield in Guyana. Both companies are industry giants and pioneers with a presence in oil fields worldwide. They have their hands in every oil field, regardless of location. Oil is their bread and butter. They are the biggest in the field with unmatched expertise. Today, however, they find themselves in a legal battle in a London court over the ownership of a massive oil project, estimated to hold over$1 trillion in reserves. The outcome of this case carries huge implications for the global oil industry. The two U.S. oil supermajors are battling over a 30 percent stake in a major oil field in Guyana, which is currently owned by Hess Corporation, a U.S. energy company that agreed to a $54 billion takeover by Chevron in 2023.
ExxonMobil, which already owns approximately 45 percent of the same field, claims it holds a “first right of refusal” under its existing agreement. This is likely to be a long legal battle over a valuable oil reserve, which is what every oil company wants. The fight between the world’s two biggest oil firms could shape the future of the industry. Whoever wins will strengthen their position in the global market. For ExxonMobil, the most valuable American oil company, winning could help it stay on top. The two oil companies are no match for national oil companies in terms of oil reserves, nor do they possess as much oil as those state-owned companies.
However, they do have the know-how, the experience, and the technology to operate in almost any oil field in the world. They are always in desperate need of more oil reserves and will go anywhere, to any place, in search of a few barrels of black gold. It is their bread and butter. For Guyana, with its small population and clean environment, there is no real need for the polluting effects of black oil to disrupt its natural surroundings. However, the financial rewards are too great to ignore, offering the country a chance to place itself on the global energy map. With oil reserves exceeding 12 billion barrels, and more expansion on the horizon, Guyana stands to gain immensely. The current legal battle between the two oil giants is over a prize worth more than $1 trillion. In the end, Chevron has more at stake and a greater need to win, as it aims to boost its oil reserves to better compete with the world’s leading oil company, ExxonMobil. It is a matter of competition and narrowing the gap with its top rival. Without a doubt, this is a case well worth fighting for.
By Kamel Al-Harami
Independent Oil Analyst
Email: [email protected]
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