Categories: Business

Why Oil Prices Could Soon Skyrocket – UAE Energy Minister

In this file photo taken on November 29, 2016, the logo of OPEC is pictured at the OPEC headquarters on the eve of the 171st meeting of the Organization of the Petroleum Exporting Countries in Vienna, Austria. JOE KLAMAR / AFP

 

UAE Energy Minister Suheil al-Mazrouei said on Monday current low oil and gas prices are unsustainable and warned that if they last longer, it could lead to energy shocks.

Mazrouei said that “very good signs” of rising demand for oil have been seen in China and India, two of the world’s biggest crude consumers, and to some degree in Europe.

“This environment of low oil and gas prices, I don’t think it’s sustainable,” the minister said in a virtual interview hosted by the US-UAE Business Council.

Mazrouei said that if low oil prices persist for a long period, some of the current high-cost producers will drop out leaving a supply gap, pushing prices higher.

“We need someone to fill in that gap, otherwise we are going to have shocks in… prices and the last thing we want is to have shocks,” he said.

“We need to have stability and to have a reasonable and fair price.”

Brent crude crashed to multi-year lows under $20 a barrel and WTI (for May delivery) sank into negative territory in April for the first time in history  as demand slumped due to coronavirus lockdowns and a global supply glut.

The two benchmarks have recovered to around $40 a barrel after the OPEC+ producers alliance agreed to record production cuts of 9.7 million barrels per day in April, effective for two months starting May.

Earlier this month, the alliance extended the historic cuts through July as governments around the world ease unprecedented lockdowns in many countries.

Mazrouei said that although oil consumption has dropped to 2013 levels “we think things will go back to normal within one or two years.”

“Unless we have a second wave of Covid-19, I think we will see a demand recovery at a pace that is adequate to the cut we have done as… OPEC+, provided other producers do not rush and over-produce,” Mazrouei said.

Solomon Elusoji

Disqus Comments Loading...
Share
Published by
Solomon Elusoji
Tags: OIL OPEC UAE

Recent Posts

  • Politics

Osagiobare Emerges YPP Candidate For Edo Governorship Elections

  The Young Progressive Party in Edo State has chosen its flag-bearer for the September 19 governorship election in the…

7 mins ago
  • Crime Watch

Weapons Uncovered In Delta Church, Says Police Commissioner

  The Delta State Police Command says it had uncovered some weapons in a church building in Okwe community, Asaba…

1 hour ago
  • Coronavirus
  • Entertainment

Popstar Peter Okoye Says He Tested Positive For COVID-19

  Nigerian popstar, Peter Okoye on Saturday, said he and his family tested positive for COVID-19. "It took me a…

2 hours ago
  • Sports

NBA ‘Very Comfortable’ With Restart Venue Despite Virus Surge

    NBA Commissioner Adam Silver said Friday the league remains "very comfortable" with its decision to restart the season…

2 hours ago
  • Entertainment

Kanye West Inks Yeezy Deal With Gap, Whose Shares Surge

    The struggling Gap brand has inked a deal with the mercurial Kanye West to produce a new line…

2 hours ago
  • Headlines
  • Politics

Edo 2020: PDP Issues Obaseki Certificate Of Return In Abuja

  Ahead of the September 19 governorship election in Edo State, Governor Godwin Obaseki has received his Certificate of Return…

3 hours ago