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UAE Minister of Energy and Industry Suhail Al Mazroui in Abu Dhabi yesterday. The minister said Opec+ countries are open to taking further action to balance the market if needed. Image Credit: WAM

Abu Dhabi: The US-China trade war is the prime reason behind the slump in oil prices, UAE Minister of Energy and Industry Suhail Al Mazrouei said in Abu Dhabi on Sunday.

The minister’s remarks come as the Opec+ Joint Ministerial Monitoring Committee (JMMC) prepares to meet in the capital on Thursday.

The ongoing US-China trade tensions saw a major escalation at the start of this month, with tit-for-tat tariffs by the world’s largest two economies coming into effect.

Oil markets on Friday closed with Brent trading at $61.54 (Dh226) and West Texas Intermediate (WTI) on $56.52, both of which were up on the week as the market reacted positively to the news of US-China trade negotiations in October.

$61.54

price per barrel of Brent crude oil at close on Friday

“All markets are suffering from this trade tension between the US and China… We are hopeful that there will be some good news later on this year around that tension, [and] hopefully it will be resolved,” Al Mazrouei said, during a media press conference for the upcoming World Energy Congress that is taking place in Abu Dhabi this week.

The minister said the Opec+ countries would be open to taking further action in the form of production cuts to support the oil market if needed, but that it would be premature to expect any such decision to come out of Thursday’s JMMC meeting.

“It’s premature to say that we will have a recommendation, if there is a recommendation it’s going to be discussed and it will be presented in the press conference that we will have, [but it’s likely] there will not be any decision taken.

“We don’t take decisions like that just on feelings, we take decisions based on data and based on analysis. That’s why we have the Joint Technical Committee team meeting on Tuesday; they will discuss and report to the JMMC what is their views on the current cuts and [possible] future cuts. It’s not a decision we easily take,” he added.

“Anything that the group sees that will balance the market we are committed to do and discuss. I wouldn’t suggest we just jump to cuts everytime we have an issue on trade tension [between the US and China]”, he said.

Al Mazrouei also pointed out that as producers, Opec+ main priority was ensuring a balanced market with no oversupply, and not fixing prices.

“The concern should be around the balance of inventories, we need to have enough inventories and not to have an over storage to see a glut and an oversupply,” he said. “Our job is to make the market balanced and we will continue that work.”

Commenting on the UAE’s production cuts, Al Mazrouei said the UAE was exceeding its commitments.

“The UAE is totally committed to meeting and even exceeding its commitments. On average, we are exceeding the 100 per cent levels.

“When it comes to conformity, we don’t only report what we say, we use independent sources… I can assure you that the UAE since the beginning of the year until now is exceeding 100 per cent and that is our commitment,” he added.