All indications point to an oil supply surplus in the first quarter of 2022, Suhail Al Mazrouei, UAE Minister of Energy and Infrastructure, said at the ADIPEC oil and gas conference, adding that the OPEC+ is likely to stick to its current production policy when it next meets in early December.
The OPEC and its allies agreed earlier this month to stick with plans to raise oil output by 400,000 barrels per day (bpd) from December, despite calls from the US for extra supply to cool rising prices.
"All of the data are showing us in the first quarter we will have a surplus of supply compared to demand," Al Mazrouei said on the sidelines of the conference in Abu Dhabi.
"Today, we are seeing a shortage and it's not unexpected because of what is happening to all the fossil fuels," he said.
Asked if, given concern about the surplus, OPEC+ needed to adjust the pace of its output increases, he said: "It is highly unlikely that in a matter of two weeks something catastrophic is going to happen to drive that."
Top Organisation of the Petroleum Exporting Countries (OPEC) producer Saudi Arabia has dismissed calls for speedier oil supply increases from the bloc and its allies, citing economic headwinds.
President Joe Biden, concerned that gasoline prices at a seven-year high are stoking inflation in America, has called on the 23-nation alliance to turn on the taps and bring down crude prices.
"We care about the producing nations and we don’t want a stagnation in world economic growth," Al Mazrouei said.
"But at the same time we cannot just pump more when there is no technical requirement for it.
He said a main concern was some countries "demoting" investments in fossil fuels as part of a global energy transition while investment was still needed to meet demand.
OPEC+ supply restraint has underpinned a rally that had pushed global benchmark Brent crude to a three-year high, but oil markets have dropped, hit by a strengthening dollar and speculation that the US may release oil from its strategic reserves to cool prices.
Al Mazrouei, speaking earlier to reporters at Adipec, ruled out the possibility of oil prices reaching $100 per barrel.
"Next year is going to be a year of balance and probably a surplus in the supply. We will have enough oil plus also some production is gradually coming from the US, from shale oil producers," he said.
Crude prices have climbed around 60 per cent this year to more than $80 a barrel, with several energy executives and leaders such as Vladimir Putin saying they could get to $100.
Al Mazrouei’s comments were echoed by Saudi energy minister Prince Abdulaziz bin Salman.
Oil inventories have fallen rapidly since OPEC+ began deep supply cuts in early 2020, at the onset of the coronavirus pandemic. But they'll begin to rise again from next month, Prince Abdulaziz said.
"OPEC+ is fulfilling its duty," he said in a separate interview at Adipec.
Neither minister said whether the forecasts would change if several members continue to pump below their targets. The group only managed to raise supply by around 250,000 barrels a day in October, mainly because Nigeria and Angola are struggling amid a lack of investment in exploration and development.
The prince said oil markets were calm relative to those for coal and natural gas, prices for which soared to record highs last month.
"The oil market is not responsible for energy shortages," Prince Abdulaziz said. "Compare us to every other source of energy. Volatility is coming from the other sources of energy. There's way much more volatility."
Oman's energy minister also said there was no need for OPEC+ to accelerate its production increases.
BP expects 'robust' oil prices for longer
Oil prices are likely to remain high for longer, BP Plc CEO Bernard Looney said.
"There's a constructive market at the moment and I think you can expect oil prices to remain robust for some time to come," he said.
Still, the company is being run to break even at an oil price of $40 a barrel since "there are many uncertainties," Looney said.
Occidental Petroleum Corp.'s CEO Vicki Hollub said her company also had a $40 breakeven oil price.
Looney also called the recent COP26 summit "a success" because it included a pledge from nations to cut emissions of the greenhouse house. Methane "is now on the global agenda," he said. "We have more ambition, not enough, but we have more ambition."
‘Biden should focus on US oil, not OPEC’
US President Joe Biden should focus on raising US oil production rather than putting pressure on OPEC+ to pump faster, Hollub said. If the administration wants more supply, they should ask US producers first, she said.
"If I was going to make a call, I'd make a local call first," she said. "I wouldn't make a long distance call."
With inputs from Reuters and Bloomberg