UAE energy minister expects oil prices to recover this year

The minister said demand for oil had been higher than expected last year

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United Arab Emirates Energy Minister Suhail al-Mazrouei said Tuesday he expects a recovery in plummeting oil prices before the end of the year.

“I am personally convinced that before the end of 2016 we’re going to see a correction. The market fundamentals tell us this,” Mazrouei told an energy forum in Abu Dhabi.

The minister said demand for oil had been higher than expected last year.

“The increase in demand, if you look at 2015, was higher than we expected. We said 1.2 (million barrels per day) to 1.25 (million bpd), and we ended up with 1.5 (million bpd),” he said.

“That means when oil prices are lower, demand will be higher,” he added.

“The market will resolve it. I think that’s the only fair assessment of the current situation,” he said at the Gulf Intelligence UAE Energy Forum.

Mazrouei said the decision by Gulf producers to maintain production levels was working to cull excess output.

“I think the strategy is working,” he said.

“It is a fundamental change... allowing the market to balance itself. If we do something artificial, I don’t think that is going to last,” he said, in an apparent reference to calls by other OPEC producers to cut output in a bid to support the nosediving prices.

Gulf countries led by Saudi Arabia have refused to cut production levels to shore up oil prices as they push to drive new players, in particular US shale producers, out of the oil market.

U.S. crude tumbled below $31 a barrel on Tuesday, extending a sell-off that has pushed it to more than 12-year lows amid a global supply glut, a strong dollar and tepid demand.

The UAE, a federation of seven sheikhdoms, sits on 5.9 percent of the world’s oil reserves and 3.1 percent of its natural gas.

The oil price slump has seen it and other Gulf states embark on belt-tightening measures to cut spending and boost non-crude revenues.

The UAE took the lead by liberalizing fuel prices in June and raised electricity charges in Abu Dhabi.

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