• 5 minutes THE GREAT OIL PRICE PREDICTION CHALLENGE OF 2018
  • 8 minutes So oil touched $80! (WTI break $71 twice). What does the future hold?
  • 14 minutes China Tariff Threatens U.S. LNG Boom
  • 2 hours Realism Replaces Unlikely Bromance: Macron and Trump Aren't As Chummy As They Used To Be
  • 2 hours The Warning Lights: Full-Blown Trade War Would Cost Jobs, Growth And Stability
  • 3 hours Tesla’s Powerpack Battery in Australia Made up to $17 Million
  • 1 hour Lucid Motors Partners With Electrify America For ‘Ultra-Fast’ Charging
  • 2 mins Barrick to Buy Randgold
  • 18 mins Global Hunger Continues to Grow Driven By Climate Change
  • 4 hours Saudi Aramco IPO Seems Unlikely
  • 8 hours Will Robots Bring The Demise Of European Artistry?
  • 20 hours Downloadable 3D Printed Gun Designs, Yay or Nay?
  • 4 hours The moves toward 'zero-manning' in oil & gas
  • 9 hours Threat: Iran warns U.S, Israel to expect a 'devastating' revenge
  • 1 day Permian already crested the productivity bell curve - downward now to Tier 2 geological locations
  • 21 hours Why Are the Maldives Still above Sea Level?
Just How Low Can Iran’s Oil Exports Go?

Just How Low Can Iran’s Oil Exports Go?

U.S. sanctions on Iran are…

The Biggest Risk In Today’s Oil Markets

The Biggest Risk In Today’s Oil Markets

The oil market is tightening…

OPEC Seeks Capacity Buffer To Counter Dollar-Led Oil Price Jumps

Oil production rig in the jungle

OPEC is encouraging all its members to build buffers of oil production capacity in order to be able to counter this year a surge in oil prices led by a weaker U.S. dollar, the UAE’s Energy Minister Suhail Al Mazrouei told The National in an interview on Thursday.

The weakening of the U.S. dollar in recent months was one of the reasons for the oil price rally. Both WTI and Brent prices hit three-year highs at the end of January as the dollar further slipped, before the oil price rally came to an end two weeks ago with the financial markets turmoil, soaring U.S. oil production, and money managers taking profits from part of the overstretched net long position they had amassed in oil and oil product futures.

“We are incentivising all the group members to have some buffers. That buffer is [to assure] that if you have a surge [in demand] or issue in one of the countries you can replace that in the market and achieve a short and medium-term re-balance of the market,” Al Mazrouei told The National, answering a question about the downsides of a weak dollar on prices.

The UAE itself has plans to raise capacity, so do Kuwait and Iraq. Saudi Arabia currently also has spare production capacity, since it is cutting some 500,000 bpd from its production as part of the OPEC/non-OPEC deal. The oil production capacity of Iraq is nearing 5 million bpd, its oil minister Jabbar al-Luiebi said last month, while Baghdad is currently producing around 4.4 million bpd.

While OPEC producers are surely happier with the price of oil now than last year or in 2016, the cartel is careful not to overshoot its own strategy to tighten the market too much or see wild upswings in prices that can further motivate U.S. shale drillers to pump more oil.

Speaking to The National, Al Mazrouei dismissed the U.S. shale threat to OPEC’s market share—like many other OPEC officials have been doing lately—and instead focused on an upcoming shortage of supply due to the low level of investments in recent years.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News