The United States will always play an important role in global energy markets, even though President-elect Joe Biden is likely to be less vocal than President Donald Trump about oil, the UAE’s energy minister said ahead of Inauguration Day.
“The United States of America is a major player now … with its production, with the fact that this industry that has been developed through shale oil and gas has created lots of jobs and created an economy by itself,” said Suhail al-Mazrouei. That won’t change under a new U.S. president who is expected to focus more on renewable energy and less on oil, he said.
President Trump used to post on Twitter about crude oil and even communicated with OPEC leaders Saudi Arabia and Russia during the oil price war last year. Biden is likely to take a different approach, but al-Mazrouei said the U.S.’s leading role in energy markets is likely to remain.
“Whether President Biden and the new administration [will] be vocal on Twitter or not … the role of the United States will be always important,” he told CNBC’s Hadley Gamble on Tuesday as part of the virtual Atlantic Council Global Energy Forum. Separately, the UAE energy minister said he’s “optimistic” that the oil market will recover before OPEC+ cuts expire in April 2022.
The oil-producing group and its allies in April reached an agreement to cut a historic 9.7 million barrels per day in an effort to support crude prices after the coronavirus pandemic destroyed demand. The cuts will taper gradually until April 2022, when the deal will expire.
In view of the continuing global health crisis, the alliance in December agreed to raise production by 500,000 barrels per day instead of the initial 2 million bpd. This month, OPEC+ agreed to hold output largely steady, while Saudi Arabia announced an additional voluntary cut of 1 million bpd for February and March.
Al-Mazrouei said there are still many barrels of oil in storage and the market is not balanced yet. “We continue drawing down on the inventories until we reach some reasonable levels, and hopefully that will be done by … the timeframe that we set, which is April 2022,” he said.
“I’m optimistic that we would reach it before [that],” he added. “But let’s say, even if it takes us … to that date, then I think that will take us to balance.” Oil prices have somewhat recovered on the back of vaccine hopes and production cuts, but are still down from pre-Covid levels and are expected to average just above $50 per barrel this year.