Project delays and slowing shale production will lead to a rebound in oil prices next year, according to the UAE’s energy minister Suhail Al Mazrouei.
The minister yesterday said that economic growth in some countries would lead to higher demand. “Project delays and increased demand give us the impression that the market will have a correction in 2016,” he said. The price of Brent crude, the global benchmark, has fallen 50 per cent since its summer high last year of more than US$100 per barrel.
The nine largest international oil companies have cut spending by nearly 30 per cent in the period from January to September compared to a year earlier, according to London-based Energy Aspects, an energy market research company.
Amrita Sen, chief oil analyst at Energy Aspects, said that significant cutbacks would eventually lead to oil prices rising, but it would take time. “There will be a gaping hole in the market, the question is timing and we think it’s more likely in 2017,” she said. The US Energy Information Administration forecasts record drops in US shale production this month – potentially a seventh consecutive month of declines. However, there is the prospect that an increase of Iranian crude production might cause an even larger glut and keep oil prices low. Ms Sen said that Iran remained an unknown because its fields might require extensive maintenance.
“People just don’t know about Iran, how damaged the fields are, and that’s the issue,” she said.
Opec meets next month with some member countries calling for a cut in output. Yesterday, Mr Al Mazrouei said that Opec would assess the market and determine a solution when it next meets.
lgraves@thenational.ae
dalsaadi@thenational.ae
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