Will Oil Price Volatility Affect Gulf Sovereign Investment?

December 14, 2018 by Daniel Brett

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Oil came under heavy selling pressure in the last quarter of 2018, casting a pall over oil-based sovereign wealth funds’ hopes of boosting inflows. The question on many lips is whether this is a market correction that will be sustained into 2019 or a temporary blip. Q4 Casts Doubt on Gulf SWF Oil Revenue Bonanza Investment by oil-based SWFs has tended to correlate with oil prices. After hitting a high of $113/b in June 2014, oil collapsed to $45/b within six months and under $30/b by the beginning of 2016. The collapse moderated Middle Eastern SWF inflows and, in turn, crimped asset growth. A surge in Brent prices in 2018, fuelled by President Trump’s decision to reimpose sanctions on Iran, OPEC’s third biggest oil producer, raised hopes that oil-based sovereign wealth funds would rebound on the back of oil revenue growth. The steep plunge in crude futures in…

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