The UAE energy minister said a global oil pact that is trimming 1.2 million barrels per day is enough to balance the market but the US-China trade war, rising US shale production and geopolitics are concerns.
Opec+, the alliance that includes members of the exporters group and countries led by Russia, are cutting output at a time when two Opec members, Venezuela and sanctions-hit Iran, are seeing a decline in production, Suhail Al Mazrouei said on Wednesday at the UAE Energy Forum taking place in Abu Dhabi.
“1.2 [million bpd] is enough,” Mr Al Mazrouei said. “Even if we reduce by 1.2 [million bpd]- two major countries in decline are not included.”
Opec+ decided in December to start trimming output from January for a period of six months with a view to review the agreement in an April meeting. Opec wants to lower oil inventories to their five-year average, a level that helps to rebalance the market.
The minister is concerned about rising shale oil production in the US, which has helped it outpace Russia and Saudi Arabia as the world’s biggest oil producer, with overall crude production reaching 11.7 million bpd.
“The largest unknown is geopolitics to me and the trade war,” he said.
"[I'm] not pessimistic about 2019. One factor that is affecting shale production is infrastructure."
The US Energy Information Administration estimates domestic crude output to increase by 1.2 million bpd to reach 12.1 million bpd in 2019 with growth tilted towards the second half of 2019.
The minister also dismissed tweets by US President Donald Trump against the alliance saying Opec+ were not in "the business of trusting or not trusting presidents. [We're] In the business of watching the markets," he said.
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President Trump on Saturday credited his own "talent" for bringing prices down even as he dismissed Opec as "essentially a monopoly".
Mr Trump in November called oil's 30 per cent slump as a "tax cut to America and the world" and thanked Saudi Arabia for the low prices.
The minister dismissed Mr Trump's assertions from last week and said that it wasn't "logical" for Opec to manipulate oil prices.
"At Opec we don’t chase the price. We don’t want a higher price that threatens economic growth because that impacts our consumers," he said.
Mr Al Mazrouei also played down concerns about Qatar's January 1 exit from Opec, which it had joined in 1961. The largely gas-producing nation announced its intention to leave the group ahead of Opec's annual meeting in Vienna in December, citing increased priority towards developing its domestic gas resources.
"Not worried about Qatar, not a country with significant capacity that could risk the market. I wouldn’t even put any emphasis on them leaving. We didn’t understand their decision. It’s their sovereign right, we respect it," he said.
The minister added that nuclear energy was still very much part of the UAE's energy mix but noted that there would be "a bit of a delay". Abu Dhabi is building the $24.2 billion Barakah nuclear plant, which will have total power generation capacity of 5,600 Megawatts when completed.