UAE president's death makes little impact on oil prices

Nov 03, 2004 01:00 AM

The death of Sheikh Zayed bin Sultan al-Nahayan, president of the oil-rich United Arab Emirates (UAE), is not expected to have a major impact on already climbing world crude prices, experts said. The death of the ailing Sheikh Zayed "had been expected and will not take the markets by surprise", said Abdulkhalek Abdullah, who heads a research centre in Sharjah, one of the seven members of the UAE federation.
"Markets will not be greatly affected... Markets are usually affected by violent and unexpected events," he told.

Sheikh Zayed, who ruled the UAE since its birth in 1971, died. He was in his late eighties.
The UAE is ranked fourth within OPEC with a production quota of 2.356 mm bpd and is currently producing about 2.5 mm bpd. The country has proven reserves of 97.8 bn barrels of oil (fifth in the world) and over 6 tcm (212 tcf) of gas, again ranking it fourth in the world.

French geophysics expert Alain Leron said there was no apparent reason for the markets to be troubled by Sheikh Zayed's demise.
"Preparations have been under way for a while for a smooth succession," and his death should not have an impact on the country's production, he said.

Walid Khadduri, editor of the Cyprus-based Middle East Economic Survey (MEES), said the UAE is "a state of institutions" whose oil policy will not be affected by the death of its leader.
"Despite the magnitude of the event, I think oil policy will remain unchanged and I don't foresee a major impact on oil markets," he said. "Like other Gulf Arab producers, the UAE is currently pumping at maximum capacity and has solid institutions" running its oil industry, Khadduri added.

Sheikh Zayed's death came one day after a cabinet reshuffle, the first in seven years, saw the appointment of Mohammad bin Dhaen al-Hamli, an oil industry veteran, as new energy minister. A UAE source quickly tried to reassure markets after the reshuffle by stressing that Abu Dhabi would continue to cooperate with efforts to meet rising demand for crude.
The Emirates "will continue to abide by its commitments toward OPEC and related production-quota agreements", the source familiar with official thinking told. “The UAE will also continue to cooperate with joint efforts by producers to stabilize world oil markets and meet rising demand," the source added.

Iraqi oil expert Karim Aqrawi said Sheikh Zayed's death would, at most, have a "minimal impact" on world markets.
"The UAE is politically and economically stable and everything has been planned for a long time," he said.
Abdulwabbab Abu Dahesh, head of investment research at Riyadh Bank in Saudi Arabia, agreed that world markets will not be perturbed.
"The UAE's oil policy, based on pumping at maximum capacity, will not change," he said.

What is certain is that oil prices are affected by events such as the US presidential elections, the deteriorating situation in Iraq and troubles in production zones throughout the world.
Oil prices bolted back above $ 50 a barrel as aides to US President George W. Bush claimed victory over John Kerry in the race to the White House. Analysts said markets were betting that a win by Bush would push prices higher because his policies would be likely to further fuel tensions in the oil-rich Middle East.

Source: AFP
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