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U.A.E. Says Oil Cuts Removed ‘85% of the Problem’ of Oversupply

  • Energy minister plays down risk to oil from possible trade war
  • Russia is ‘a great partner’ in cuts deal: Suhail Al Mazrouei

The global deal to rein in oil output has removed “85 percent of the problem” of oversupply, and OPEC and allied producers are seeking ways to cooperate after the agreement ends, according to United Arab Emirates Energy Minister Suhail Al Mazrouei.

The world economy is benefiting from the cuts, he said at a Bloomberg Businessweek Middle East conference in Dubai. Mazrouei, who also serves this year as president of the Organization of Petroleum Exporting Countries, isn’t concerned that a potential international trade war might upset the crude market, he said Tuesday in a Bloomberg TV interview in Dubai.

Suhail Al Mazrouei

Photographer: Chris J. Ratcliffe/Bloomberg

“I’m not that concerned about a trade war getting to the oil market,” Al Mazrouei said in the interview. “It may affect the cost of drilling, the cost of completion, but I think overall the effect is going to be minor to the oil prices.”

Participants in the oil-cuts accord plan to meet later this month in Jeddah, Saudi Arabia, to assess their progress toward clearing a glut and re-balancing the market. Saudi Arabia, Russia, the U.A.E. and other producers agreed in November to extend the deal through this year. Brent crude has gained 1.5 percent in 2018 and was 25 cents higher at $67.89 a barrel at 11:55 a.m. in London.

‘Great Partner’

The benchmark fell 2.5 percent on Monday after China imposed retaliatory tariffs on U.S. goods, the latest move in an escalating trade dispute between the world’s largest economies.

Russia has been a “great partner” in the cuts agreement, and the majority of participants in the deal are supportive of a longer-term cooperation between OPEC and non-OPEC producers, Mazrouei said in the interview.

Producers should first achieve their goal of reducing crude inventories in developed economies to the five-year average before they consider adopting a different measurement for when the oil market is re-balanced, he said. OPEC and its allies have held talks about changing the way they gauge the impact of their production cuts, including possibly using use a seven-year inventory average, according to delegates from the group.

“I would prefer to focus on achieving the mission first,” Al Mazrouei told Bloomberg TV.


15 Comments on "U.A.E. Says Oil Cuts Removed ‘85% of the Problem’ of Oversupply"

  1. BobInget on Thu, 5th Apr 2018 10:31 am 

    Here are our top 10 takeaways ON THE OUTLOOK FOR WORLD ENERGY (IEA)

    1. We’re going to need a lot more energy

    On our current path we will need 30% more energy by 2040 to meet demand. One third of this will come from India and the IEA estimate that they will add the equivalent of the EU to their electricity generation by then. China will add the equivalent of the US!

    2. Renewables are booming

    Renewables saw the highest growth rate of any energy source in 2017 and renewable technologies in general are getting cheaper, with solar currently being the cheapest. Another significant cost reduction is anticipated as China continues in leaps and bounds with renewable energy generation. 6 out of 10 solar PV (photovoltaics) cells are produced in China at present. However, challenges such as renewables’ intermittency still need to be tackled.

    3. The global energy landscape is shifting

    China is developing an energy strategy that includes ambitious and large-scale renewable solutions. Russia remains the most important player in the gas market, but the role of the US, Canada and Australia is gathering pace as the demand for export to Asia is growing. Trade is shifting from the pipelines of Russia towards LNG (liquid nitrogen gas) being shipped. In terms of nuclear power, the US and to a certain extent France’s, nuclear fleet is ageing and there is little appetite to build new or extend the lifetime of existing operating plants. China is set to overtake the US as a global leader in the area of nuclear technology exports.

    4. Access to electricity is improving

    To ensure affordable, reliable and modern energy for all is one of the Sustainable Development Goals but sub-Saharan Africa still lags behind and efforts should be redoubled, especially considering the high solar and hydro-power potential.

    5. The IEA is using a new Sustainable Development Scenario

    This new scenario for determining the world energy outlook ‘provides a benchmark for measuring progress towards a more broadly sustainable energy future’ by integrating the three Sustainable Development Goals that are most closely related to energy. It is vital to do this as energy is linked to human health impacts due to emissions, inequalities due to energy access according to wealth and gender, poverty alleviation and even education.

    6. It’s increasingly important to stay chilled

    Cooling is set to be one of the major drivers of future electricity demand, only out done by industrial growth, but more than the growing demand for electric vehicles. In the wake of global warming, population rise and increased standards of living, the requirement of energy intensive air-conditioning will increase hugely.

    7. Storage is crucial

    Especially to facilitate increasing uptake of renewables. However, even though costs are going down, there is still no major market penetration and considerably more capacity for energy storage is required.

    8. We need to focus on buildings

    Energy efficiency needs to focus on buildings due to the long-term lock-in effect of infrastructure. Improvements have been made in the global buildings sector thanks to continued adoption and enforcement of building energy codes and efficiency standards. Yet progress has not been fast enough to offset growth and increasing demand for energy from buildings.

    9. Despite progress, fossil fuels are stubborn

    In the 1980s at the time of the Brundtland report and before climate change was close to the forefront of public consciousness, 83% of the world’s energy was generated using fossil fuels. Despite the changing landscape, in 2017 fossil fuels still accounted for 81% of energy supply.

    10. We’re going to need even more energy to meet the Paris Agreement

    Current trends are not enough. Despite a shifting landscape, oil demand is still set to grow. Energy demand grew by 2.1% in 2017 and fossil fuels met over 70% of this growth. With growth in shipping, trucking and aviation, demand is projected to rise to 105 million barrels a day. We need 580 million more electric vehicles, double efficiency and triple the installed capacity of solar panels to stay below the two degree threshold of temperature increase. International government policies need to play a vital part in powering the changes required to meet our collective target

  2. BobInget on Thu, 5th Apr 2018 10:58 am 

    ” However, challenges such as renewables’ intermittency still need to be tackled”..

    For long term investors only.
    1st: Shale gas is the real thing. Unlike shale oil, (tight rock) shale gas has in recent past saved our chili and will CONTINUE to do so through thick and thin. (in 2008 NG went from near $16 to $1.02 BT)

    Today’s ultra low NG prices may rise a bit through
    inflation but NA’s domestic supply, good for many decades at current demand.

    Look at pipelines. US and Canada.
    At present, many are paying dividends as high as
    14% because of rock bottom share prices.

    Short term investors may want to look elsewhere
    for storage.

  3. BobInget on Thu, 5th Apr 2018 11:04 am 

    On Topic.

    China, in a hundred years will never tariff LNG.
    World wide we are switching from coal to gas.
    Chinese are quick learners. ALL oil and gas buys are now in yuan, Backed by Gold.

  4. Davy on Thu, 5th Apr 2018 12:09 pm 

    Back by gold? Lol, got references?

  5. peakyeast on Thu, 5th Apr 2018 6:40 pm 

    Of course, it is fossil fuels that are stubborn since they control the actions of man. LOL.

  6. Cloggie on Thu, 5th Apr 2018 6:48 pm 

    “Back by gold? Lol, got references?”

    My God meathead, are you a lazy person:

  7. makati1 on Thu, 5th Apr 2018 6:54 pm 

    Cloggie, maybe the goat farmer is not as up on world events as he pretends? The gold backed petroyuan is old news. I was reading about it last year.

  8. Davy on Thu, 5th Apr 2018 7:01 pm 

    Lol, you groupies are so baffled by your own agenda you can’t even understand modern economics. There is no gold backed petroyuan. Period. You guys are showing raw stupidity and that is what I would expect out of all of you.

  9. Anonymouse1 on Sat, 7th Apr 2018 2:32 am 

    Wait a minute, you just described yourself to a tee there exceptionalist. Well played, dumbass.

  10. GregT on Sat, 7th Apr 2018 2:51 am 

    “Lol, you groupies are so baffled by your own agenda you can’t even understand modern economics.”

    Modern economics is a failed ideology Davy. Infinite exponential growth in a finite environment is a physical and mathematical impossibility.

    But don’t let that little factoid get in the way of your emotional and psychological difficulties.

  11. makati1 on Sat, 7th Apr 2018 3:03 am 

    Guys, it’s kinda fun watching the Missouri Mule mentally disintegrate. Freud would have had a field day with him as a patient. He denies reality, even when his nose is rubbed in it. He resorts to immaturity and bully tactics because he knows there is no moral defense of his murderous, plundering, insane country. None. The sooner it is put down, the better for the rest of the world.

  12. David on Sat, 7th Apr 2018 6:07 am 

    “Wait a minute, you just described yourself to a tee there exceptionalist. Well played, dumbass.”

    stupid weasel, is there a petroyuan backed by gold? We know you know how to attack people like a little millennial coward, anyone can do that. Show us you have have at least a little brain.

  13. David on Sat, 7th Apr 2018 6:15 am 

    “Modern economics is a failed ideology Davy. Infinite exponential growth in a finite environment is a physical and mathematical impossibility. But don’t let that little factoid get in the way of your emotional and psychological difficulties.”

    Translation: Davy I don’t really understand economics and finance even though I tell people I did it for 25 years. My usual response is an infinite growth and a finite environment is mathematically impossible redundant and routinely posted ignorant response. No shit Sherlock. Tell us something about the here and now not down the vague road of dumbass you live in of who knows when. Spit it out stupid, is there a gold backed petroyuan like dumb n Dutch and billy 3rd world both boasted of?

  14. David on Sat, 7th Apr 2018 6:18 am 

    “Guys, it’s kinda fun watching the Missouri Mule mentally disintegrate.“

    It is kinda a funny watching how the intellectually frail old man only comes out when he as the cover of his equally repugnant friends to cover his stupidity. Billy 3rd world is there a gold back petroyuan or not? Please tell us that your comment is true or not:

  15. David on Sat, 7th Apr 2018 6:24 am 

    “Back by gold? Lol, got references?” My God meathead, are you a lazy person:”

    Dumb n Dutch here is the real shit not your phony gold selling YouTube:
    “The Gold-Backed-Oil-Yuan Futures Contract Myth”

    “All the rumours and analyses on gold, oil and yuan that are making rounds now in the blogosphere are
    based on the Nikkei article. But the Nikkei article itself contains zero official sources. Basically, the whole
    story has been invented by Damon Evans.”

    “Specifications of the contract can be read here. In all official sources, though, there is no mention of
    gold. Officially this contract is not “convertible into gold”.”

    “Quickly “the story” by Nikkei transformed through the blogosphere where analysts suggested the gold
    in SGE vaults would back the yuan. The problem with this theory is that gold in SGE vaults (i) isn’t owned
    by the Chinese government and (ii) isn’t allowed to be exported from the Chinese domestic market (not
    very convenient for foreign oil producers). Then analysts suggested the gold in vaults of the Shanghai
    International Gold Exchange (SGEI) would do the job. But SGEI gold (i) isn’t owned by the Chinese
    government either and (ii) can only have been sourced in the international gold market, paid for with US
    dollars. So much for the oil-gold trade circumventing US dollars as presented by Nikkei.”
    “1.As shown above, China hasn’t announced anything but an oil-yuan futures contract. Gold has nothing
    to do with it. 2. Yuan can technically be spent on gold at the SGE, but gold in the Chinese domestic
    market (SGE system) is not allowed to be exported. Gold from the SGEI is allowed to be exported but is
    bought in the international market via yuan with US dollars.3.Foreign enterprises, like oil producers,
    cannot hedge gold on the Shanghai Futures Exchange. The SHFE is not open for international customers.
    There’s only a spot deferred product listed on the SGE, which is comparable to a futures contract,
    through which foreign enterprises can hedge gold in yuan. But why would oil producers buy gold and
    subsequently hedge the metal in yuan. Their end position would be merely exposure to the price of
    yuan. Why then not buy a yuan denominated bond with an interest rate? Or hold gold without the

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