The UAE is optimistic about the recovery of oil demand in 2021, but expects the rebound to be gradual, the energy minister of OPEC’s (The Organization of the Petroleum Exporting Countries) third-largest producer said.
Suhail Al Mazrouei said that the global distribution of COVID-19 vaccines and the easing of trade tensions between the US and China, are reasons for optimism about the recovery of oil demand. “We see that 2021 will be a year of recovery,” he said. “However, the recovery in demand will be gradual and will not be in a quarter or two.”
The roll-out of vaccines would contribute positively to the recovery of major economies, while improving trade ties between the US and China might boost oil demand from major economies such as China and India, he said.
Experts predict that by the end of next year, Brent, the international benchmark for oil, could reach $65 a barrel, while some others forecast a price of $44. After rising to above $51, oil prices have fallen somewhat from their October highs on concern that a COVID-19 mutation discovered in the United Kingdom could speed up virus spread and lead to further lockdowns across Europe that could impact oil demand.
Despite the emergence of a mutant strain of the virus, it is not a cause for concern, Mr Al Mazrouei said. “The global health sector can co-operate and find solutions for this virus,” he said.
OPEC+, an alliance of oil producers led by Saudi Arabia and Russia, has helped the market during the time of reduced demand through its agreement on output cuts, he said.
Earlier this month, OPEC+ revised down its oil demand forecast for 2021 by 350,000 barrels per day (bpd) but left its assessment for this year relatively unchanged, as it factored in uncertainty over the impact of COVID-19 on transportation fuels.
It is projected that global demand for 2021 will rise slightly due to the potential slowdown in fuel demand in the OECD economies in the first half of the year. OECD is the Organization for Economic Co-operation and Development. It is an intergovernmental economic organization with 37 member countries.
OPEC+ said that total demand for 2021 is expected to be 96.89 million bpd, slightly higher than this year’s forecast 89.99 million bpd.
Mr Al Mazrouei added the UAE hopes that more oil-producing countries will join the alliance in the future. The UAE accounts for 4.2 percent of global oil output, according to data.