UAE Energy Minister Suhail al-Mazrouei said on Monday that all indications point to an oil supply surplus in the first quarter of 2022 and he expected OPEC+ would likely stick to current production policy when it next meets in early December.
OPEC and its allies agreed earlier this month to stick with plans to raise oil output by 400,000 barrels per day (bpd) from December, despite calls from the United States for extra supply to cool rising prices.
“All of the data are showing us in the first quarter we will have a surplus of supply compared to demand,” Mazrouei told Reuters on the sidelines of the ADIPEC oil and gas conference in Abu Dhabi.
“Today we are seeing a shortage and it’s not unexpected because of what is happening to all the fossil fuels,” he said.
Asked if, given concern about the surplus, OPEC+ needed to adjust the pace of its output increases, he said: “It is highly unlikely that in a matter of two weeks something catastrophic is going to happen to drive that.”
Top OPEC producer Saudi Arabia has dismissed calls for speedier oil supply increases from the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, citing economic headwinds.
“We care about the producing nations and we don’t want a stagnation in world economic growth,” the UAE’s Mazrouei said.
“But at the same time we cannot just pump more when there is no technical requirement for it. We are a technical organisation, we are not going to do political decisions.”
He said a main concern was some countries “demoting” investments in fossil fuels as part of a global energy transition while investment was still needed to meet demand.
OPEC+ supply restraint has underpinned a rally that had pushed global benchmark Brent crude to a three-year high, but oil markets have dropped, hit by a strengthening dollar and speculation that the United States may release oil from its strategic reserves to cool prices.
Mazrouei, speaking earlier to reporters at ADIPEC, ruled out the possibility of oil prices reaching $100 per barrel.
“Next year is going to be a year of balance and probably a surplus in the supply. We will have enough oil plus also some production is gradually coming from the U.S., from shale oil producers,” he said.
The UAE’s current oil production capacity is more than four million barrels per day, but the Gulf nation seeks to increase that to five million barrels per day by 2030, he told Reuters.