Oil supply will pose a bigger problem than demand on 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 that there are signs that the United Arab Emirates and other OPEC+ producers will stick to current production targets this year.
But he warned that when the Organization of the Petroleum Exporting Countries and its partners review plans for 2024 later this year, the biggest dilemma may be how the world will meet increased consumption.
“I’m not worried about demand; what we’re worried about is whether we’ll have enough supplies in the future,” Mazrouei said. “What worries me is the decline I see in production in many countries.”
His comments 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 the recent growth in oil inventories shows that “there are enough volumes in the market, and the price is also a testament to the balance.”
“You always have to consider the slowdown in the economy,” he said, adding that OPEC+ remains ready to act if necessary. Mazrouei said he “doesn’t expect a shock” as a result of US plans announced on Monday to release more crude from its strategic reserves.
OPEC+ delegates have said the group intends to stick to current production targets for the rest of the year, even after fellow member Russia last week announced a strong production reduction of 500,000 barrels per day in retaliation for European Union sanctions.
Oil has had a mixed start to 2023 as traders try to price the impact on demand of China’s reopening, supply curbs announced by Moscow amid the Ukraine war and persistent concerns that tighter US monetary policy could trigger a recession.
The UAE is not concerned about its current production quota agreed with OPEC+, although 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 could seek a higher target this year to use the new capacity it has developed over the past few years.
