Research by UBS, the world’s largest wealth manager, concludes that while the transformation from non-renewable to renewable energy sources is underway, its speed may be overestimated. In a new report entitled The Middle East at a crossroads:
The energy transition, the company’s Chief Investment Office expects crude oil and gas prices to trend higher in comingyears.
“The world’s thirst for energy seems almost insatiable, and while the pandemic will likely cause the first contraction in global energy demand since the 1980s, we believe global oil demand has not yet peaked,” says Michael Bolliger, Chief Investment Officer for Emerging Markets at UBS Global Wealth Management and leading author of the report.
This revised timeline provides additional time for countries in theMiddle East to diversify their economies away fromhydrocarbon exports into higher value-add sectors.
The main driver of oil demand growthover thecoming years, according to the report, is likely to come from sectors other thantransportation. Risingplastic demand andaccess to vast crude oil reserves at very low extraction costs provides the region with a unique opportunity to become a global leader in the supply of petrochemicals.
In addition, UBS Global Wealth Management’s analystsexpect supplies of renewable energy to keeprising swiftly. Middle Eastern countries again seem well positioned toparticipate in thesetrends.The UAE, for example, produces the world’s cheapest solarenergy, and Saudi’s Dumal Al-Jandal plant is one of the mostcost-efficient wind energy farms globally, with a price of lessthan USD 2c/KWh.
Niels Zilkens, Head Arabian Gulf at UBS Global Wealth Management, says: “Giventhe UAE’s natural advantages, the region can become a globalpowerhouse for renewableenergy production, whichcould help ease fiscal strains, boost economic diversification,
create jobs, and help to slow climate change.”
Abdallah Najia, Head Saudi Arabia at UBS Global Wealth Management, says: “Saudi Arabia has competitive advantages in both renewable and non-renewable energy. In addition, the kingdom’s economically advantageous access to hydrocarbons means it has potential to diversify into the growing sector of petrochemicals, which taken together can help ease fiscal strains, boost economic diversification, and create jobs.”