Question

Crude futures in New York were lower on Wednesday, following a record decline in the first quarter

Oil held near $20 a barrel as Saudi Aramco’s output surged above 12 million barrels a day, but Russia said it would refrain from further production hikes.

Crude futures in New York were lower on Wednesday, following a record decline in the first quarter.

While state-run Aramco’s oil supply has surpassed 12 million barrels a day and is ticking higher, Russia said it won’t lift output as it’s not profitable to do so, according to a government official familiar with the country’s plans.

President Trump has said the US will meet with Saudi Arabia and Russia in an attempt to bolster prices.

The market is grappling with a bumper oversupply, while demand is set to fall by as much as 30 million barrels a day in April, according to an executive at the world’s largest independent oil trader.

Any agreement to cut output would likely be too late and would fall short of the loss in consumption, according to Goldman Sachs Group Inc.

Industry data signaled that US oil stockpiles are set for their biggest weekly increase since 2017.

“I don’t think they’re going to come to the table for talks just yet, because for both sides, it would require a significant step-down,” Amrita Sen, chief oil analyst at Energy Aspects said in a Bloomberg TV interview. “I do think both Russia and Saudi Arabia will be forced to cut back production, not because there’s a deal or they’re talking, but because of market forces.”

Prices:
West Texas Intermediate lost 21 cents to $20.27 a barrel as of 10.35am in London
Brent crude for June settlement fell 4.8 per cent to $25.09
Dated Brent, the benchmark for two-thirds of the world’s real oil supply, was assessed at $17.675 on Tuesday, down 11.5 cents from Monday when it was already the lowest price since 2002

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Required Question

Question 01: What are the major threat in the fall of Oil Price in the OPEC?

Question 02: What are the entrepreneurial skills needed in order to draw different businesses in the Gulf countries?

Question 03: Discuss the major drawbacks in the Gulf Countries economy?

Answer 1

Answer 01:
The major threat in the fall of Oil Price in the OPEC is the relations with other countries and their export business. Gaining the market over predatory pricing and competing over price has never been a good strategy to establish new market shares and relations with new countries. Decreasing the price at such level not only has decreased the overall demand for oil products in the international oil market but has also degraded the relations with earlier business partners. Falling prices and degrading relations will affect the revenues and operations of weaker business players and hence will directly hurt the economies of related OPEC countries.

Answer 02:
The entrepreneurial skills needed to draw business in the Gulf countries are
•   Management of good relations with clients
•   Diversifying the revenue in multiple products
•   Investing in the manufacturing industry and sustainable business
•   Learning leadership and investment strategies from developed countries such as the United Arab Emirates.
•   Attracting foreign investments in local handmade products.

Answer 03:
The major drawback in the Gulf Countries economy is that the driving factor of these countries’ economies is the crude oil and oil business. Most of the oil reserves of this world are found in these Gulf Countries. Having the price war and fierce competition in the market will not only decrease the revenue from the oil but also will lead to bad relations with many business potential countries. Whenever there is competition in the market, most of the end benefit goes to the customers instead of the producers. In addition to that, predatory pricing strategies have never evolved into a healthy business future. Therefore, in order to sustain the economy of the Gulf Countries which are majorly based on the oil business, it is not a good choice to play price wars with the world.