• 3 minutes Boris Johnson taken decision about 5G Huawei ban by delay (fait accompli method)
  • 6 minutes This Battery Uses Up CO2 to Create Energy
  • 10 minutes Phase One trade deal, for China it is all about technology war
  • 12 minutes Trump has changed into a World Leader
  • 12 hours Shale Oil Fiasco
  • 5 hours Might be Time for NG Producers to Find New Career
  • 46 mins We're freezing! Isn't it great? The carbon tax must be working!
  • 2 hours Environmentalists demand oil and gas companies *IN THE USA AND CANADA* reduce emissions to address climate change
  • 4 hours Angela Merkel take notice. Russia cut off Belarus oil supply because they would not do as Russia demanded
  • 4 hours Indonesia Stands Up to China. Will Japan Help?
  • 1 day Swedes Think Climate Policy Worst Waste of Taxpayers' Money in 2019
  • 1 day Wind Turbine Blades Not Recyclable
  • 4 hours Beijing Must Face Reality That Taiwan is Independent
  • 12 hours US Shale: Technology
  • 1 day Denmark gets 47% of its electricity from wind in 2019
  • 1 day Prototype Haliade X 12MW turbine starts operating in Rotterdam
How Will The Libyan Oil War End?

How Will The Libyan Oil War End?

The war for Libya’s oil…

Oil Will Stay Above $50 Per Barrel In 2020

Oil Will Stay Above $50 Per Barrel In 2020

Energy markets have started the…

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
Download on the App Store Get it on Google Play