The United Arab Emirates said oil prices would be even higher today if it wasn’t for OPEC+, signaling the group will continue resisting U.S. pressure to pump faster.
“Fortunately, we have OPEC+,” UAE Energy Minister Suhail Al-Mazrouei said Monday at the Africa Oil Week conference in Dubai. The 23-nation alliance of major crude exporters has prevented “us from having double or triple the prices and that’s something we need to appreciate.”
Brent crude’s climbed 62 per cent this year to almost US$84 a barrel thanks to the global economic recovery from the coronavirus pandemic and OPEC+’s supply cuts, which started early last year.
OPEC+ is easing those restrictions at a rate of 400,000 barrels a day each month. The U.S. and other consumers such as Japan and India have called on the UAE, Saudi Arabia, Russia and other members of the group to accelerate their output increases.
Mazrouei echoed his Saudi counterpart, Abdulaziz bin Salman, by saying the oil market has been far calmer than those for natural gas and coal. Prices for gas have more than doubled in Europe and Asia this year amid severe shortages, causing electricity costs to soar and hitting economies from China to India.
“If OPEC+ wasn’t there you would see something similar to what happened with gas and coal,” Mazrouei said. “We are working together to balance the market.”
PHONE CALL AWAY
OPEC+ should remain cautious because the oil market will switch to a surplus in the first quarter of next year, he said.
That’s “due to demand softening,” he said. There are still COVID flareups “in certain countries, so we have to be careful. We have to balance and make sure we are doing the required volumes.”
Still, members can reconvene in a matter of days if the situation changes and OPEC+ needs to adjust its policy.
“We are a phone call away from each other,” he said. The countries will work to ensure there’s no “huge increase in prices that could pull down the world economy.”
Mazrouei said OPEC+’s decision last week was unanimous and no member proposed raising daily output by more than 400,000 barrels.
MORE OIL INVESTMENT
He blamed the rise in gas and coal prices on governments discouraging investment in fossil fuels and trying to transition to renewable energy too quickly.
The UAE has pledged to neutralize emissions of planet-warming gases by 2050, though it will continue with a multi-billion dollar project to increase its crude-production capacity to 5 million barrels a day from just over 4 million.
“Oil and gas are needed for us to move quicker to the 2050 and 2060 net-zero commitments,” he said. Spikes in energy prices will become more frequent “if we are not investing enough.”