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Despite the calls to boost supply to tame high prices, OPEC+ is likely to continue easing the cuts with the gradual pace it set in July as it expects the oil market to tip into a surplus as soon as the first quarter of 2022, according to the energy minister of one of OPEC’s heavyweights, the United Arab Emirates (UAE).
“All of the data are showing us in the first quarter we will have a surplus of supply compared to demand,” despite the current deficit on the market, the UAE’s Energy Minister Suhail al-Mazrouei told Reuters on Monday on the sidelines of the ADIPEC energy forum in Abu Dhabi.
OPEC+ and OPEC don’t want stagnation in global economic growth, al-Mazrouei said, a week after major oil consumers such as the U.S. and Japan said that the OPEC+ alliance’s snub of calls for more supply could hurt the economic recovery from the pandemic.
“But at the same time we cannot just pump more when there is no technical requirement for it. We are a technical organisation, we are not going to do political decisions,” al-Mazrouei told Reuters.
In a separate interview with Bloomberg, the UAE’s energy minister said, “That should be enough,” referring to the monthly increase of 400,000 barrels per day (bpd) in the collective production of the OPEC+ group.
OPEC’s de facto leader and the world’s largest oil exporter, Saudi Arabia, also signaled—through its Energy Minister, Prince Abdulaziz bin Salman—that the pace of the easing of the cuts should be enough as a surplus is coming early next year.
Two other Gulf oil producers, OPEC’s Kuwait and Oman—part of the wider OPEC+ group—do not see a reason for the alliance to jump the gun and respond to the calls from consumers, either.
Last week, Iraq’s Oil Minister Ihsan Abdul Jabbar Ismail said that OPEC+ doesn’t plan to change the pace of easing the production cuts at its next meeting in early December and would review the output schedule in the first quarter next year.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.