UAE Committed to OPEC Output Reduction Deal

The UAE will remain committed to the global oil output reduction deal to eliminate the remaining glut on the market, which amounts to 100 million barrels to reach the average target of the coming five years, said a report citing the minister of energy and industry.

"OPEC and non-OPEC commitment to the cut deal has significantly contributed to reducing large amounts of global crude reserves by more than 220 million barrels since the beginning of 2017 as compared to the average recorded over the previous five years," remarked Suhail bin Mohammed Mazrouei, Trade Arabia reported.

"Compliance to the declaration of cooperation announced during the OPEC ministerial meeting on November 30, 2017, to cut oil output by a combined 1.8 million b/d amounted for the first time in history to 129% in December 2017 among OPEC’s 24 member and non-member nations," he added.

Optimism is running high that there is now a strong base on which to make the collaboration with non-OPEC members a more permanent fixture of energy markets, said Mazrouei. 

Saudi Oil Minister Khalid Al Falih said last month that the kingdom’s energy alliance with Russia will continue for “decades and generations” and last week there was news of plans for joint investments by Saudi and Russia. 

Mazrouei said OPEC was encouraging its 14 members to build oil capacity buffers to temper any wild upswings in price as a result of a weakening dollar this year.

"We are incentivizing 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 rebalance of the market," said the minister when asked about the potential downsides of a weak dollar on global prices.

The US dollar is currently trading at its lowest level in more than three years, having lost 2.5% of its value against other currencies this year, pushing up the price of commodities, including gold. Experts, including Mark Mobius of Franklin Templeton, are betting on a subdued dollar to push the price of oil to a high of $100 a barrel by next year.