Olusola Bello
Insufficient oil and natural gas investments could lead to further hikes in the energy market, United Arab Emirates Energy Minister Suhail al-Mazrouei said Monday.
According to Quantum Commodity Intelligence, the minister added that current oil prices would be even higher if it weren’t for the OPEC+ producer group, signalling the group will continue with its current policy of adding 400,000 bpd rather than crank up production volumes.
“Fortunately, we have OPEC+,” said Al-Mazrouei, adding the group has prevented oil “from having double or triple the prices and that’s something we need to appreciate.”
Oil and gas are needed to ensure reliable energy supply during the transition period required to implement non-carbon emitting projects, he told the Africa Oil Week conference, which started Monday in Dubai.
The minister also said the producer group would continue to exercise caution to balance markets, noting that Covid-19 remains a threat to the demand recovery.
“We are seeing in the first quarter a surplus in the balance due to the demand softening.”
OPEC+ has been increasing output by 400,000 bpd since August and is set to add 2 million bpd of production by year-end.
Mazrouei echoed comments last week from Saudi energy minister Prince Abdulaziz bin Salman, noting that oil markets this year have been far less volatile than coal and natural gas.
“If OPEC+ wasn’t there, you would see something similar to what happened with gas and coal,” Mazrouei said.
Meanwhile, Brent clung to gains throughout Monday after a steep hike in December Official Selling Prices by Saudi Arabia was coupled with news of wintry weather in China, but the crude future was still more than a dollar lower than last Thursday’s highs amid fears of demand faltering as Covid infection rates rise.
January Brent was trading at $83.55/b by 1630 UK time, up $0.80/b from the same time Friday, but down from Thursday’s high of $84.49/b.
Distillate futures matched the rally in crude and November low sulfur gasoil futures were trading at $727/mt at the same time, up $6/mt, or $0.80/b, from 1630 UK time Friday.
But there was a surprising fall in jet fuel differentials despite the US opening its borders to foreign travellers again Monday after a 20-month ban.
Front-month TTF natural gas prices were rising again amid concerns Putin’s orders to Gazprom to start pumping more gas to Europe were going unheeded.
The Kremlin does not see any violations of the order given by Russian President Vladimir Putin to increase gas injection into underground storage facilities in Europe, but the questions should be addressed to Gazprom, Russian Presidential Spokesperson Dmitry Peskov said, according to Russian news agency Tass.
Meanwhile, crude-oil production by the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, rose by 480,000 barrels per day in October, but only half of the group’s members actually lifted output last month, according to an S&P Global Platts survey released Monday.
The survey said many OPEC+ members are “struggling to pump [oil] as they had promised.” The 19 OPEC+ members with production quotas were a combined 600,000 barrels per day below their allocations for the month, putting compliance at 113.21%, the survey said. Within OPEC+, Russia was the largest producer, with output at 9.96 million barrels per day – well above its quota of 9.81 million barrels per day and Russia’s highest production since April 2020, the s the survey showed.
Last week, OPEC+ agreed to hold its current output deal in place, raising production quotas by 400,000 barrels per day in December.
