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Oil supplies will pose a bigger issue than demand for global markets in 2024 as some countries struggle with production and investment, the United Arab Emirates energy minister said.
Global oil markets are currently balanced, Suhail Al Mazrouei told Bloomberg TV in Dubai, adding to signals that the UAE and fellow OPEC+ producers will stick with current production targets this year.
But he cautioned that, when the Organization of Petroleum Exporting Countries and its partners review plans for 2024 at the end of the year, the biggest quandary may be how the world will satisfy rising consumption.
“I’m not worried about demand — what worries us is whether we are going to have enough supplies in the future,” Mazrouei said. “What worries me is the decline that I see in many countries’ production.”
His remarks echo those of OPEC Secretary-General Haitham Al-Ghais, who warned on Monday that markets are suffering from a “chronic” lack of investment.
For this year, the UAE’s top energy official said that recent growth in oil inventories shows “there’s enough volumes in the market, and the price also is a testimony of the balance.”
“You need always to be mindful of the slowdown in the economy,” he said, adding that OPEC+ remains prepared to act if needed. Mazrouei said he’s “not expecting a shock” as a result of US plans announced on Monday to release more crude from its strategic reserves.
Delegates from the OPEC+ alliance have said the group intends to adhere to current output targets for the rest of the year, even after fellow member Russia announced a hefty 500,000 barrel-a-day output cutback last week in retaliation for European Union sanctions.
Oil has had a mixed start to 2023 as traders attempt to price the demand impact of China’s re-opening, supply curbs announced by Moscow amid the war in Ukraine, and persistent concerns that tighter US monetary policy may trigger a recession.
The UAE isn’t concerned about its current production quota agreed with OPEC+, though it will consider whether to seek a higher level when the group comes to discuss output for 2024, Mazrouei said.
RBC Capital Markets LLC said last month that Abu Dhabi might seek a higher target this year in order to utilize new capacity it has developed over the past few years.
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