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Abu Dhabi offshore show opens doors as oil market strengthens

Abu Dhabi offshore show opens doors as oil market strengthens
Seatrade Offshore Marine Workboats Middle East opens its doors on Monday morning against a backdrop of firmer oil prices and positive sentiment.

The Abu Dhabi event provides a key setting for workboat operators and service providers to show off latest technologies and sector developments. Inevitably, in this heavily energy-dependent region, the condition of the oil and gas markets, and energy prices generally, are an essential bellwether of this diverse market.

At close of business on Friday, Brent crude had climbed steadily to reach $56.76 a barrel and West Texas Intermediate closed at $50.66 a few hours later. The Brent price has continued to rise steadily over recent weeks, notching up a gain of more than 24% in the three months since 26 June.

This is a significant development, according to energy analysts, which reflects a continuing rise in global energy demand and reasonably robust compliance with OPEC production constraints. These have been agreed up until next March but there is talk of extending them beyond this date. Meanwhile, oil has increased its share of the global energy mix in both 2015 and 2016, reversing a 15-year trend in the opposite direction.

Experts are still split over future oil prices, however, with some still sticking to the “lower for longer” or “lower for ever” arguments. Most agree, though, that increasing volatility will be a key feature of the future market as global oil demand continues to outstrip production increases, and the impact of lower E&P spending by energy majors means less new oil in the market.

For Middle East producers, this is all good news because they enjoy the lowest breakeven production costs anywhere in the world. Despite the production constraints, national oil companies in the Gulf have largely stuck to their strategy of maintaining or growing market share as production in other more expensive regions has been curtailed.