This year’s forecast for oil prices is in line with last year; the UAE’s minister of economy expects real GDP growth of 3.5-4% in 2017, from an estimated 3.7% in 2016, as disclosed by Emirates NBD’s UAE Purchasing Managers Index (PMI) survey. The minister mentioned oil prices are rather stable and continue to be at comfortable levels with a modest increase in the UAE oil production heading into 2018 coming from local production which includes crude oil and gas extraction.
The United Arab Emirates is among the world’s largest oil producers and one of the world’s largest exporters of oil since the 1960s; it has the 8th cheapest gas in the world at $1.91 per gallon. “The Persian Gulf country and OPEC member relies heavily on oil to fuel its economy, with crude accounting for 40% of its GDP last year,” tells Matthew DiLallo, contributing writer for The Motley Fool. To keep gas below $2 per gallon is all part of a strategic pricing policy.
At the present time, UAE’s petroleum prices are changing gradually but export orders tend to fall; UAE’s cost inflation has gone from “$37 a barrel in 2016, rising to $50 in 2017 and increasing by 10 per cent a year to 2020,” reports Khaleej Times.
Due to its access to conventionally accessible oil wells, there are the plans to raise its current crude oil extraction; this brings the 3.6% of global daily output capacity at 3.23 million barrels per day, a supply that will meet well the demand of the market.
The UAE, however, is looking at a diversified economy with reduced reliance on oil to prepare for a future after fossil fuels. Eventually, the UAE’s crude output will be decreased, although they’ll continue making investments in the oil and gas industries. Initiatives are on the table to expand the non-oil sector of the UAE that is now growing (up from the current level of 49.1% to about 64% of GDP contribution expected by 2030), Suhail Bin Mohammed Al Mazrouei, energy minister of the UAE, told CNBC.
With or without oil, the UAE is also on the recovery in many other sectors. For example, the construction and hospitality sector is definitely getting a boost leading up to Dubai Expo 2020. Contact us for more information on opportunities in UAE.