ABU DHABI: A trade war between China and the US, and the prospect of increased production of American shale oil, are the top concerns for the energy industry in 2019, according to UAE Energy Minister Suhail Al-Mazroui.
Al-Mazroui, who was president of the Organization of the Petroleum Exporting Countries (OPEC) last year, told a conference in Abu Dhabi that both trends threatened to throw the global oil industry out of balance after a spike in the volatility of energy prices.
Speaking at the UAE Energy Forum 2019, organized by the consulting firm Gulf Intelligence in the capital Abu Dhabi, he said he was cautiously optimistic that talks in China with American trade representatives could avert the possibility of an all-out trade war.
“This (a possible trade war) is fundamental, not only affecting us but affecting the whole economy of the world. I tend to be more optimistic that we’re not going to see a war. It’s negotiation tactics. They’ll end on a resolution, whatever it takes, this year or next year,” Al-Mazroui said.
Booming shale production in the US, which helped make America the top oil producer in 2018, could throw out OPEC attempts to balance global demand and supply of crude, he added.
After a year of steadily rising oil prices, crude fluctuated sharply in the final quarter of the year. From a high of $86 per barrel last October, Brent crude fell on fears of oversupply, weak global economic demand, and geopolitical factors such as the decision by US President Donald Trump to exclude some of the biggest oil consumers from the newly reintroduced sanctions on Iranian exports.
Al-Mazroui said the exemptions on Iranian exports “weren’t expected by OPEC, but when they came we dealt with them.” The volatility in the final quarter of the year was “not acceptable,” he added. But he said 2018 was a “good year” for OPEC in which it had sought to stabilize oil supplies around the five-year average, and it was “still very close” to that level, with obvious implications for the oil price.
In the face of criticism from Trump of last month’s decision by OPEC and non-OPEC producers led by Russia to cut production by 1.2 million barrels per day, Al-Mazroui said: “We’re not playing with President Trump or any other president. We hear them (the Americans). They’re major consumers versus the major producing nations. We hear what they say, but we’ll always do the right thing from our perspective, which is always trying to maintain the balance.”
Asked about the relevance of OPEC in the wake of the decision by Qatar to leave the producers’ organization, Al-Mazroui said: “OPEC will always be there. On average, more countries are joining than are leaving. It was a sovereign decision (by Qatar), but we don’t understand the logic.”