OPEC was ready to add oil to the market if there was “an appetite,” he said, but saw no need for an extraordinary meeting of the Organization of the Petroleum Exporting Countries.
The group does not plan to meet formally to reassess output policy until June, although ministers will be able to talk informally on the sidelines of the International Energy Forum in Saudi Arabia on Feb 22.
Popular unrest that led to the overthrow of Egyptian leader Hosni Mubarak has raised concern in oil markets of wider disturbances across the Middle East, helping to drive oil prices on Monday to above $101 for Brent and more than $85 a barrel for US crude.
Benchmark crude prices wavered on Monday between small gains and losses as unrest continued in the Middle East and China reported strong exports.
Benchmark West Texas Intermediate crude for March delivery lost 16 cents at $85.42 a barrel on the New York Mercantile Exchange.
In London, Brent crude rose $2.84 to $103.78 a barrel on the ICE Futures exchange.
“Oil prices react to events and they have reacted to events in Egypt,” Al-Hamli said.
“The market is well-supplied. The price can’t be explained by current fundamentals. The stocks are high,” he added.
The minister said the UAE was producing around 2.2 million barrels per day (bpd), in line with its OPEC output target, and that it had capacity of 2.8 million bpd.
Al-Hamli saw “a gradual increase in demand,” which he said was a sign of global recovery, and although there was a price level at which further demand would be choked off, he said he could not say what it was.
“Naturally, prices do affect demand. We don’t want demand to be affected by high prices,” he said.
Brent oil prices have risen to a premium of more than $15 to US crude, which historically has been the higher quality and more highly-priced futures contract.
Al-Hamli said there was a distortion, adding traders “had a role” and that stocks in the US were very high.
His remarks came as oil major Shell said Iraqi oil output would double in the next decade, not quadruple as in initial government targets.
In its energy scenarios to 2050, published for the first time since 2008, Royal Dutch/Shell said Iraq was a key uncertainty in the oil supply picture, with output likely to reach 5-6 million barrels per day over the next decade if reasonable stability and security are achieved.
Iraq’s previous government had said partnerships with oil and gas companies including Shell could push output to as much as 10-12 million bpd.
“This would mean annual growth rates of 10-15 percent would have to be sustained for at least 10 years — a feat unseen in recent history,” Shell said.
Shell said that in the medium term, a balance must be struck between ramping-up production quickly for Iraq to generate income and avoiding over-supply so that OPEC can manage its spare capacity buffer adequately.
