Opec cautiously optimistic of market recovery, seeks to bolster ties with US

Opec secretary general said the oil exporters body would continue to strengthen its relationship with the US energy industry under President Joe Biden regardless of his stated commitment to fight climate change and focus on renewable energy.

Mohammed Barkindo, speaking at a virtual forum, also sounded cautiously optimistic that the oil market would recover this year from the slump in demand brought on by the coronavirus pandemic.

The Opec chief said he would agree that the recovery is fragile, there are still more uncertainties. “But we are cautiously optimistic that the recovery will materialise this year.

Barkindo was echoing the remarks made by the UAE Energy Minister Suhail Mohamed Faraj Al Mazrouei, who said at the same event earlier that he saw the start of the market recovery this year.

“This year the way we see it is a year of recovery, whether it’s going to be the end of the year where we are supposed to reach the balance or the beginning of 2022,” Al Mazrouei said.

The UAE minister also said he saw good oil demand growth in China and India as more countries begin their coronavirus vaccination campaigns.

Oil prices have rallied to an 11-month high this month, helped by a January 5 decision by most members of Opec+ to hold production steady in February and a pledge by Saudi Arabia to voluntarily cut output.

Barkindo congratulated Biden for his upcoming inauguration during a virtual panel hosted by the Atlantic Council Global Energy Forum, and said: "We continue to deepen this relationship, which we found mutually beneficial to all of us."

"We believe that we have established very mutually beneficial productive relationships with the industry in the United States. And I think we have no option but to continue to strengthen this relationship under President Biden," Barkindo added.

Biden has named climate change as one of the four biggest crises facing the US and plans to rejoin the Paris Climate Accord on his first day in office. Trump withdrew from the climate deal in 2017.

India’s oil minister, Dharmendra Pradhan, said at the same event that the unexpected move to cut output by some Opec nations had led to a price rally and was creating confusion for consuming countries.

“This kind of scenario will push us to more alternative methods of energy sourcing,” Pradhan said.

Barkindo, in response, said Opec+ needed to be flexible and had stable markets as its target.

Looking ahead, global trends surrounding energy and climate may be worrying Opec member states far more than whoever is in the White House.

"It is extremely important to understand one thing," Fatih Birol, executive director of the International Energy Agency, said during the panel. "The share of oil in the global energy markets will decline. And the speed of this decline will be determined by the pace of energy transitions."

"The bitter truth is that a clean energy transition is coming, and coming very fast," said Birol.

He also said the world should expect to see more innovations like carbon capture, hydrogen power, electric vehicles and a new generation of nuclear power. "The political position of the US will give unmistakable signals to investors around the world," he added.

issacjohn@khaleejtimes.com