Major oil producers have a capacity to increase oil supply if there is a demand and the UAE will continue to play its role to stabilise the energy market, its top official says.
Suhail bin Mohammed Faraj Faris Al Mazrouei, UAE Minister of Energy and Infrastructure, said the UAE has the capacity to supply additional volumes of crude to the market if needed and if agreed by the Organisation of Petroleum Exporting Countries (Opec) and its allies.
The Opec and its allies, the group popularly known as Opec+, are able to increase oil supply if there is demand in the market, Al Mazrouei told the Dubai-based TV channel on Monday.
Last week, Opec+ stuck to its plan to raise oil output by 400,000 barrels per day on a monthly basis, snubbing calls from the US to go beyond this volume in order to keep oil prices in check. The group has been restricting supply after the Covid-19 pandemic led to an evaporation of demand.
“The UAE and its Opec+ partners may continue with the policy until September 2022, to reach the output level seen before the coronavirus pandemic, Reuters quoted Mazeouei as having said.
“The current policy of adding 400,000 bpd a month can lead to an excess in supply in the first quarter of 2022, the minister said, expecting the US to continue to draw from its strategic petroleum reserves until 2025.
US policy action this week
US President Joe Biden could take action as soon as this week to address soaring gasoline prices, Energy Secretary Jennifer Granholm said on Monday.
“He’s certainly looking at what options he has in the limited range of tools a president might have to address the cost of gasoline at the pump, because it is a global market. Hopefully there will be an announcement or so this week,” Granholm told MSNBC in an interview.
Brent crude was up 65 cents, or 0.79 per cent, at $83.39 a barrel by 1443GMT, having lost nearly two last week. US oil gained 56 cents, or 0.69 per cent, to $81.83 after a three per cent fall last week. Both contracts rose by more than $1 a barrel in early trade.
Oil market volatility
Al Mazrouei said the oil and gas sector has seen unprecedented volatility since 2020 due to the pandemic. However, as the economy rebounds, “we are witnessing recovery”, the minister said.
“Global economic growth for this year has remained strong, especially in the second quarter of 2021. In the UAE, moving forward to 2022, the Central Bank of the UAE estimates that the country will experience significant growth in terms of the GDP. It is evident to the world that oil and gas are significant sources of primary energy supply and strongly impact economic growth and the development of the industrial sector,” he said.
Speaking the same day at the Africa Oil Week conference, Al Mazrouei said insufficient investment in the oil and natural gas industry could lead to a hike in energy prices.
“Oil and gas are needed to ensure reliable supply of energy during the transition period required to implement non-carbon emitting projects,” the minister told the four-day event in Dubai.
In his keynote address, he said the UAE is willing to invest in African solar and wind projects, and sees potential in developing hydrogen as an energy source.
The minister emphasised the UAE’s long-standing ties with African nations and highlighted the country’s position as an emerging global financial hub.
“Africa is one of the fastest-growing economies in the world. Additionally, the huge economic transformation in the energy sector in the continent, makes it ideal for investments from around the globe, especially the UAE and the Middle East,” he said.
“As a global benchmark in industrial development through the efficient use of energy resources, the UAE is a regional leader. We have a huge interest in the African market, and we see that the interest has been mutual, with Uganda recently signing new business deals across sectors, including renewable energy, at Expo 2020 Dubai,” he added.
Held for the first time in the UAE, the event witnessed the attendance of more than 30 heads of government departments from the African continent and the Middle East and high-level delegations including executives from some of the biggest global oil and gas companies. With the UAE’s investments in Africa reaching $5.64 billion in recent years, AOW will serve as a platform to fuel future collaborations and partnerships that can result in additional high-value deals in the energy sector.
“We are certain that Africa Oil Week will act as a platform to facilitate more such investments and forge greater partnerships between international investors and the African public and private sector. As a close partner of Africa, we hope to facilitate capital flow that will result in socio-economic development for Africa and the Middle East,” Al Mazrouei said.
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