UAE energy minister Suhail al-Mazrouei said that the US decision to pump 4mn barrels of shale oil was “strategic”.
Speaking at the Gulf Intelligence UAE Energy Forum in Abu Dhabi yesterday, Mazrouei called for shale output to be curbed and asked producers to be more like OPEC.
“We have seen an oversupply coming primarily from shale oil and this needs to be corrected.”
“We are concerned about the balance of the market but we are not alone in this market and we cannot under any circumstances be the only party responsible for balancing the market.
“Producers outside OPEC need to be rational; they need to be like OPEC and look at the growth of the international market for oil and to cater that. Unless that is there the market is not going to rebalance,” he said.
US oil output is set to rise over the next two years. Crude production will grow by 600,000 barrels per day (bpd) in 2015 to 9.3m bpd and by 200,000 bpd to 9.5m bpd in 2016.
Mazrouei said the current oil price was not sustainable but did not predict an increase any time soon.
“The shale oil alone brings almost 4mn from the US and the goal for growth is to bring another 4mn by 2020. That cannot be sustained, produced or invested in at the current price.
“The oil price is going to stabilise with time. If this is going to be two or three years, it depends on how rationale other producers are.”
Brent hit a new low on Tuesday falling to $46.59 a barrel- the lowest since March 2009.
OPEC has been called upon to cut production to stabilise the price. But the UAE minister said if the cartel cuts output, it risks losing its share of the market.
“If the decision was to cut output by one million or a million and a half, in a few months that [difference] would be produced by the shale oil and we would have a problem again,” he said.
“The oil price is going to stabilise with time. If this is going to be two or three years, it depends on how rationale other producers are.
“It all depends on what we see this quarter and the first half of 2015. We need more data to predict what is going to happen in 2016.”
