Energy crisis to boost oil demand – News

Dubai – Oil sector needs investment to avoid volatility like gas market, says UAE energy minister



Suhail bin Mohammed Faraj Faris Al Mazrouei, Minister of Energy and Infrastructure of the United Arab Emirates, attends a session of the Russian Energy Week International Forum in Moscow on Thursday. —Reuters

Published: Thu 14 Oct 2021, 2:05 PM

Last update: Thu 14 Oct 2021, 06:17 PM

Oil demand is expected to jump by half a million barrels per day (bpd) as the power sector and heavy industries shift away from other more expensive energy sources, the International Agency said on Thursday. energy (IEA).

The Paris-based agency, which advises governments on energy policy, said it now expects global oil demand for this year and 2022 to be higher than in its previous forecast. However, major oil producers said OPEC+ had done a remarkable job of stabilizing the market in the wake of the Covid-19 pandemic.

“Global oil demand is now expected to reach pre-pandemic levels at 96.3 million barrels per day this year, up 5.5 million from the previous report. It will increase by 3.3 million bpd next year,” the IEA said in its Monthly Oil Market Review.

Oil prices rose about 1% on Thursday after the IEA report predicted higher demand in the coming months. Brent crude futures gained 87 cents, or 1.1%, to $84.05 a barrel as of 10:10 GMT after falling 0.3% on Wednesday. U.S. West Texas Intermediate (WTI) crude futures rose 77 cents, or 1%, to $81.21, more than recouping the previous day’s 0.3% decline.

Spare production to shrink

The IEA said global oil supply is expected to rise sharply in October as U.S. production recovers from the fallout from Hurricane Ida, which severely disrupted operations on the Gulf Coast in late August. It has revised its demand forecasts for this year and 2022 upwards, increasing them by 170,000 bpd and 210,000 bpd respectively.

The IEA further estimated that producer group Opec+ is expected to pump 700,000 bpd below estimated demand for its crude in the fourth quarter of this year, meaning demand will exceed supply at least until the end of 2021. She warned that spare capacity will decline sharply, from nine million bpd in the first quarter of this year to just four million bpd in the second quarter of 2022.

“Oil prices hit multi-year highs as a shortage of natural gas, LNG and coal drives oil demand, which could keep the market in deficit until at least the end of the year,” said the IEA.

Investment in the oil industry

Suhail bin Mohammed Faraj Faris Al Mazrouei, Minister of Energy and Infrastructure of the United Arab Emirates, said that the global oil market is likely to experience the type of volatility the gas market is currently facing unless appropriate investments are made. are not carried out.

Asked if major oil producers would be willing to increase its output to cool rising oil prices, the minister said OPEC+ producers have the capacity to do so but do not want to overdo it.

“The United Arab Emirates had spare oil production capacity, but it is important to maintain balance in the market as the demand for energy and in particular natural gas is peaking,” Al Mazrouei said on the sidelines. an energy forum in Moscow on Thursday.

Market uncertainty persists

OPEC Secretary General Mohammad Barkindo said the oil market continues to face uncertainties related to the Covid-19 pandemic.

Regarding how Covid-19 creates uncertainty, Barkindo highlighted “government responses as different variants, mutations emerge and how the world is able to increase vaccination rates, especially in countries in development”.

“The market is following its course in accordance with the fundamentals of supply and demand. But we have to admit that there are external factors that influence market development,” he said.

Russian Deputy Prime Minister Alexander Novak said the global oil market is expected to fully recover by the end of next year.

Speaking during a panel with the energy ministers of Saudi Arabia and the United Arab Emirates, as well as Mohammad Barkindo, Novak said current oil prices reflect the current market situation with no expected volatility.

OPEC+ keeps its deal

Saudi Energy Minister Prince Abdulaziz bin Salman said the OPEC+ group of oil-producing countries was sticking to its previous agreement to increase production last week, as it wanted to gradually reduce production. excess oil production capacity left after the pandemic.

He rejected calls for faster increases in oil production, saying his efforts with his allies were sufficient and protected the oil market from the sharp price swings seen in the natural gas and coal markets.

“We want to make sure that we reduce these excess capacities that we have developed as a result of Covid. We want to do it in a gradual and gradual way and we believe that we will have a difficult year in 2022,” the minister told the Moscow forum.

He said OPEC+ would add 400,000 barrels per day (bpd) in November and then again in subsequent months. He said OECD oil inventories were on track to normalize at the end of this year, with 2022 shaping up to be “a bit of a tough year”.

“What we see in the oil market today is a gradual 29% (price) increase, compared to 500% increases in (natural) gas prices, 300% increases in coal prices, 200% increases in NGLs (natural gas liquids). Gas markets, coal markets and other energy sources need a regulator,” Prince Abdulaziz said.

With contributions from Reuters and AFP


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Felix J. Dixon