Abu Dhabi – Mubasher: The oil market will be “ripe” for price corrections towards the end of the month, UAE energy minister Suhail Al Mazrouei has said.
He noted that this comes after a deal by members and non-members of the Organization of Petroleum Exporting Countries (OPEC) in December, where the two groups agreed to reduce production by 1.2 million barrels per day (bpd) to reduce the supply glut and balance the market.
The top official further stated that such a cut should be enough to balance the oil market, forecasting that a correction would begin in January and be achieved sometime in the first six months of 2019.
The oil market’s current conditions are better than they were two years ago, the minister told Emirates News Agency (WAM) on the sidelines of the Global Energy Forum which opened on Saturday.
As for some OPEC members who have been exempted from the output reduction, Al Mazrouei said it was unlikely that countries like Venezuela, Libya or Iran would increase their output in 2019, noting that they may actually reduce it.
As for a meeting before April, the UAE’s energy minister said that was no need for OPEC members and non-members to meet before their upcoming meeting in April, when they would decide the collective’s output policy for the rest of the year.
In terms of his forecasts for 2019, the UAE’s energy minister told reporters that he expects 2019 to be a good year for the oil market in general, citing better fundamentals and the continued collaboration between OPEC members and non-members.
“I don’t think this is a going to be a bad year, this will be another good year in the industry. We are continuing our talks and collaboration with all of the producers, even beyond the numbers we have within OPEC and OPEC+,” Gulf News reported, citing Al Mazrouei as saying.
“The market fundamentals are healthier than we were two years ago,” he added.
During the forum, Al Mazrouei also revealed that the average price per barrel for 2018 was $70, noting that it was a good price that would bolster investments.
In 2018, the US reimposed sanctions on Iran, prompting OPEC and its allies to increase output to ensure that there was no panic and in hopes of maintaining market stability, however, prices, which had risen to $85 pb in October, retreated toward $50 a barrel towards the end of 2018.
“No one knew in June or in September that waivers [for Iran] would come,” Al Mazroui said during the Global Energy Forum.
“Our message to the United States is that, the more we understand ahead of time, the more planning we would have and the healthier that balance can be achieved. The less we understand and that puts us in a similar situation of October and November,” the minister highlighted.