There is no oversupply of oil in the market, with demand remaining strong due to the artificial intelligence and data centre boom, said Suhail Al Mazrouei, Minister of Energy and Infrastructure.
“I am not going to talk about an oversupply scenario, I can't see that ... what we're seeing is more demand,” Mr Al Mazrouei said at the Adipec conference in Abu Dhabi on Monday. “Countries like the UAE and others are investing enough, because we know the demand is there.”
His comments came after the Opec+ group, led by Saudi Arabia and Russia, agreed on Sunday to another output increase of 137,000 barrels per day for next month. They referred to the steady global economic outlook and healthy market fundamentals.
This was the ninth time the super group of eight producers, which also includes the UAE, Iraq, Kuwait, Kazakhstan, Algeria and Oman, raised production this year as it continues to unwind production cuts introduced two years back.
The group also raised output by similar levels in October and November. However, Opec+ decided to pause production increments in January, February and March due to seasonality.
“The world would require more resources, more oil, more gas and definitely more renewable energy. With AI and data centres, we need more oil,” Mr Al Mazrouei said.
He also stressed the importance of boosting investment in the oil and gas sector to keep pace with rising demand. “We should have more investment,” he added.
Economic boost
Speaking at the same event, Opec secretary general Haitham Al Ghais said oil demand is staying strong amid global economic growth.
“We see economic growth still resilient this year and next year," Mr Al Ghais said. "We see oil demand growth this year still at a robust 1.3 million barrels per day [and] year-on-year growth next year. Some people and other agencies see it at much lower levels than that, but I think they will be gradually adjusting their numbers as we have been seeing significant stock draws.
“Last week, we heard the US Energy Information Administration announcing a huge stock draw in the United States. Global inventory still remains well below the five-year average. We are still seeing good signs for demand and hopefully not seeing any surprises."
US commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) for the week ending October 24 decreased by 6.9 million barrels from the previous week, the EIA report said.
At 416 million barrels, US crude oil inventories are about 6 per cent below the five-year average for this time of year.
Lower seasonal demand in the first quarter of next year is the main reason for pausing Opec+ production increases, Mr Al Ghais said.
This is "part of our responsible attitude towards the market, responsible monitoring, close monitoring of market circumstances, to be sure that we always maintain the supply demand balance".
Oil prices climbed on Monday as Opec+ decided to hold off production increases in the first quarter of next year. Brent, the global benchmark for crude oil, was up 0.56 per cent at $65.13 per barrel at 11.46am on Monday. West Texas Intermediate, the US gauge for crude, was trading 0.56 per cent higher at $61.33 per barrel.
Brent is forecast stay in the $60 to $70 per barrel trading range, with a target of $62 per barrel by the end of the year, said Giovanni Staunovo, an analyst at Swiss bank UBS.
Oil markets have remained volatile this year amid geopolitical tensions in the Middle East and tariffs announced by US President Donald Trump. Washington's decision to announce sanctions on Russian oil companies Lukoil and Rosneft and the Fed's decision to cut interest rates has also affected oil markets.
Oil prices jumped as much as 5 per cent on US sanctions imposed on Russian oil companies last month, as a result of supply concerns in the market from one of the largest producers of oil in the world.
