Oil prices are ‘far near’ their peak as an impending rebound in Chinese demand threatens to strain a global market already pinched by tight supplies, key OPEC member the Emirates has said. United Arabs.
The comments serve to acknowledge that last week’s decision by the OPEC+ coalition to boost production will give consumers little respite from soaring energy prices this summer. The Organization of the Petroleum Exporting Countries is struggling to restore production as planned, with spare capacity limited to just a few members, the UAE minister acknowledged.
“With the pace of consumption we have, we are far from the peak because China has not yet come back,” Energy Minister Suhail Al-Mazrouei told a conference in Jordan on Wednesday. “China will come with more consumption.”
Al-Mazrouei warned that without more investment across the world, OPEC+ cannot guarantee sufficient oil supplies as demand fully recovers from the coronavirus pandemic. Prices may reach “unprecedented” levels if Russian oil and gas are completely taken off the market, he said.
OPEC+ agreed last week to open its oil taps a little faster during the summer months. The modest increase in supply represents just 0.4% of global demand in July and August and comes after several months in which the group struggled to meet its production targets.
“We’re behind by almost 2.6 million barrels a day, and that’s a lot,” Al Mazrouei said.
Only Saudi Arabia and the United Arab Emirates have significant amounts of unused production capacity, but even that is only enough to offset part of the supply shortfall created by the sanctions against Russia.
“The situation is not very encouraging in terms of the quantities we can bring in,” Al Mazrouei said.
OPEC Secretary General Mohammad Barkindo echoed the UAE’s comments, pointing to the lack of spare capacity within the group.
“With the exception of two or three members, all of them are maxed out,” he told Bloomberg, expanding on comments made at a conference hosted by RBC Capital in New York. “The world must come to terms with this brutal fact.”