The oil market could end up in a "very unpleasant situation" if producers boost output too much without keeping in mind the need to encourage investment, UAE energy minister Suhail al Mazrouei said Oct. 14.
''If we overdo one of them, we could end up in an unpleasant situation," Mazrouei said on the sidelines of the Russian Energy Week in Moscow. "Reducing or increasing the production suddenly by a large amount is not going to help. It will not allow investors to invest. You will solve the problem in the short term but you will have a bigger problem later on." Oil at $100/b is "quite possible," he said. S&P Global Platts has assessed Dated Brent at three-year highs in recent days, with the benchmark reaching as high as $84.43/b on Oct. 11.
OPEC and allies are scheduled to meet next month to review plans to increase production any more than the already agreed, at 400,000 b/d. "We are all keen to make sure that we allow the recovery from COVID and the world economy to recover smoothly," he said. "We keep monitoring the market and we take a decision depending on market conditions when we meet. Again, we are not fully responsible for everything that is happening in the market. We are a major producer but there are other producers as well." While there is no target oil price, the group does have a target to achieve a market balance and "incentivize investments," he said.
The OPEC+ alliance wants to keep incentives to encourage production. "We need to ensure that investors are incentivized and continue investing and not be worried about any restrictions for the investments in the hydrocarbons as it is required for the energy transition," Mazrouei said.
While the UAE has a commitment to net zero emissions, "that doesn't mean that we are not going to continue investing in the hydrocarbons to ensure the transition is smooth," he said. "We don't want to see hikes in the prices that limit the growth in the world economy."