Suhail Al Mazrouei, Minister of Energy and Infrastructure, on Wednesday said that oil prices could go higher as Chinese demand is likely to recover significantly while efforts by Opec+ to raise production were not yielding results fast enough.
“With the pace of consumption we have, we are nowhere near the peak because China is not back yet,” Mr Al Mazrouei said.
“The situation is not very encouraging when it comes to the quantities that we can bring. We’re lagging by almost 2.6 million barrels a day and that’s a lot.”
Last week, Opec+ agreed to increase its July and August output by about 50 per cent to 648,000 bpd. This will bring an additional 216,000 bpd on top of its scheduled 432,000 bpd coming to the market next month. The increase will be divided proportionally among members of the alliance.
Supply concerns have been driving oil prices higher since Russia's military offensive in Ukraine began in February.
Brent, the global benchmark for two thirds of the world's oil, was up 2.84 per cent at $124 a barrel at 10.13pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was 2.82 per cent higher at $122.78 a barrel.
Both benchmarks are up more than 70 per cent since last year as developed economies recover from the coronavirus pandemic, while Russia's military offensive continues into its fourth month and the EU presses forward with banning most Russian oil imports by the end of this year.
Supply has also been hit by reduced spending in the oil and gas industry as governments seek to transition to cleaner forms of energy in a bid to cut harmful emissions.
Total investment in the upstream part of the oil and gas sector fell 23 per cent below pre-coronavirus levels to $341 billion in 2021, the International Energy Forum and IHS Markit said.
Mr Al Mazrouei on Wednesday repeated his call for more investment in the global energy sector, partly because Opec+ might not be able to meet worldwide demand as economies continue to recover from the pandemic.