Opec+ committed to deliver a balanced oil market, UAE energy minister says

Crude demand is expected to be healthy in 2020 due to easing of the US-China trade tensions

The UAE’s output for June averaged 2.464m bpd, according to UAE energy minister Suhail Al Mazrouei. Khushnum Bhandari for The National

The alliance of oil producing nations known as Opec+ remains committed to deliver a balanced oil market despite rising geopolitical tensions in the region, the UAE's energy minister said on Saturday.

The group, which includes members of Opec and its allies including Russia, have been curbing production since the beginning of 2017 in a bid to control supply and support pricing. The group agreed in December to deepen cuts to 2.1 million barrels per day starting from this month until the end of March.

“Opec+ [alliance] of more than 20 countries are committed not to raise prices and not to just benefit, but ... to deliver balanced oil markets and to ensure the world is well supplied,” said minister Suhail Al Mazrouei.

Speaking at the Atlantic Council Global Energy Forum in Abu Dhabi on Saturday, Mr Al Mazrouei reiterated that oil-producing countries “care about consuming nations and continue to work with them to drive prosperity, rather than just benefit ourselves as producers”.

Tensions between the US and Iran rose following the killing of Qassem Suleimani, a top military commander of the Islamic republic last week.

Oil prices rose to more than $70 per barrel following the killing but pared gains to close below $65 per barrel on Friday as tensions between the two nations receded.

Demand for oil will be healthy in 2020 due to the easing of trade tensions between the US and China, Mr Al Mazrouei said.

“I am not worried about demand but the issue is how do we forecast supply. On demand, we are at a better position in 2020 than in 2019 as trade tensions between [the] US and China is easing. I am worried about the lack of supply in the longer run as investors are not investing or an over-supply in the short term ... the role of US production is very crucial in the short term,” he said.

On the current situation in the region, the energy minister said he is optimistic about a “de-escalation of tensions".

“There is a [hope] that things will not escalate and wisdom will prevail. We are optimistic that 2020 will be a good year, like 2019, for oil markets.”

Tensions between Washington and Tehran escalated earlier this month after the US assassinated Qassem Suleimani, the head of the elite Quds Force that is within the folds of Iran's Islamic Revolutionary Guard Corps, which led to retaliatory strikes by Iran against US military bases in Iraq on Wednesday.

However, an easing of tensions since and the news on Thursday that a delegation led by China's vice-premier Liu He will head to the US this week to sign a 'phase-one' trade deal that will remove some of the tariffs the world's two biggest economies were imposing on each other helped to drive prices down at the end of trading on Friday.

Mr Al Mazrouei does not see co-operation between the Opec+ alliance and the US over pricing as “there are thousands of producers in the United States”.

“That’s against the law of the United States and anyone who is sensible will agree with that. The secretary of energy of the United States has no control over those thousands of producers,” he said.

“The United States, like many other producers who are outside the group, are outside. What is important for us is to have a dialogue of understanding to ensure that we have a balance.”