The global oil markets are in a “healthier place” compared to two months ago as renewed industrial and commercial activity fuels demand for crude and other products, according to the group chief executive of Abu Dhabi National Oil Company.
"Some [purchasing managers indexes] actually are inching above the crucial 50 mark for the first time since Covid-19 started, and they are pointing towards economic expansion, once again, and that is also being reflected in the oil markets, which have clearly tightened in the very recent weeks,” Dr Sultan Al Jaber, who is also a UAE Minister of State, told a web panel discussion organised by the World Government Summit.
"If you look back, where we were just two or two and a half months ago, oil markets are in a much healthier place today,” he added.
A PMI below 50 indicates contraction, while a reading above the threshold indicates economic expansion. Flash PMI data for the eurozone economies and the UK this week showed PMI levels rebounding to four-month highs, with the eurozone showing a PMI reading of 47.5, up from 31.9 in May. The UK index increased to 47.5, from a low of 30.0 last month.
In the oil markets, Brent, the most widely traded crude commodity benchmark was up 0.74 per cent at $40.61 per barrel at 7.09pm UAE time. The benchmark, which sank as low as $22.45 in March, has rebounded by nearly 81 per cent, buoyed by strong demand and action by the Opec+ group of producers. West Texas Intermediate, which plunged into negative territory in April, was up 0.79 per cent, trading at $38.31 per barrel.
Dr Al Jaber said there was "reason for cautious optimism and positivity” in the oil markets.
"There is a reason for positivity. And that is, for example, the recent Opec+ agreement, together with robust demand, helping rebalance the market. All of these are good signs, and are good reasons for the industry to be optimistic and positive about the future,” he said.
Dr Al Jaber was speaking on a panel attended by Laurence Fink, chairman and chief executive of BlackRock, Bruce Flatt, chief executive of Brookfield Asset Management, Francesca McDonagh, group chief executive of the Bank of Ireland as well as Adebayo Ogunlesi, chairman and managing partner of Global Infrastructure Partners (GIP).
Brookfield Asset Management and GIP are part of a consortium of six investors who signed an agreement worth $20.7 billion to invest in Adnoc’s gas pipeline network on Tuesday.
BlackRock, the world’s largest asset management firm, also entered a $5bn deal for Adnoc’s oil pipelines last year, alongside private equity firm KKR.
Dr Al Jaber said the gas pipelines deal – the largest in the global energy infrastructure space this year – was one of "many opportunities that will go on stream in the very near future."
“We in Adnoc will continue to develop investment opportunities across the business value chain and that's in order for us to make smarter use of our capital and to be reinvest it into more profitable projects,” he added.
GIP’s Mr Ogunlesi described the company’s investment in Adnoc’s gas pipelines as a “perfect investment” in the current global environment.
"The UAE has a stated policy of becoming energy-independent focused on gas and so you can expect gas to grow. Adnoc has a proposed policy of expanding petrochemicals, expanding refining, so gas will continue to grow,” he said.
"You have a long term contract, you have [a] minimum volume of commitments, so it is actually the perfect investment for this kind of environment and fits in very nicely with one of our strategies, which is to look for opportunities to partner with leading companies on infrastructure assets,” Mr Ogunlesi added.
The consortium will take a 49 per cent stake in Adnoc Gas Pipeline Assets, which has the leasing rights to 38 pipelines for 20 years. The pipeline network spans 982.3 kilometres taking Adnoc’s gas to local customers in the UAE. Adnoc holds the majority stake, with a 51 per cent interest.
