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Abu Dhabi A major oil summit began on Monday with officials offering bullish optimism that artificial intelligence and demand for power for global aviation will boost energy prices, just hours after OPEC+ halted production growth plans for next year.
The comments at the annual Abu Dhabi International Petroleum Exhibition and Conference in the emirate’s capital highlighted contradictions in the market and the United Arab Emirates, a major oil producer, which hosted the event. united nations COP28 climate talks in 2023.
Sultan al-Jaber, head of state-run Abu Dhabi National Oil Co., which is hosting COP28, called the energy market “in need of strengthening, not replacement.” US Secretary of the Interior Doug Burgum Al-Jaber’s comments were praised and criticized for what he described as “a set of policies driven by an ideology around climate extremism.”
“The demand for electricity continues to increase,” Burgum said. “Today is the day to declare that there is no energy change. There is only energy growth.”
OPEC+ halted production growth in the first quarter
On Sunday, OPEC+ met and decided to increase its oil production by an additional 137,000 barrels from December. However, it said other adjustments planned for January, February and March next year would be put on hold “due to seasonality.”
OPEC+ includes the cartel’s main members as well as nations outside the Russia-led grouping.
Benchmark Brent crude sold for around $65 a barrel on Monday, down from a post-COVID high of around $115 a barrel following Russia’s full-scale invasion of Ukraine in 2022. It had fallen as low as $60 a barrel in recent days due to concerns the market would have too much production.
“Yes, OPEC+ is blinking, but it is a calculated move,” said George Lyon, head of geopolitical analysis at Rystad Energy. “Sanctions on Russian producers have added a new layer of uncertainty to supply forecasts, and the group knows that producing more now could have adverse effects later. By holding off, OPEC+ is protecting prices, anticipating unity and buying time to see how sanctions apply to Russian barrels.”
However, Suhail al-Mazeroui, the emirate’s minister of energy and infrastructure, rejected any idea of there being too much oil on the market.
“I’m not going to talk about an oversupply scenario,” he said. “I can’t see it. I can’t justify it. And I think what we’re seeing is more demand.”
Bergum supports production, shocks Russia
Burgum, the former Republican governor of North Dakota and chairman of US President Donald Trump’s National Energy Dominance Council, was on hand for the Abu Dhabi oil summit on Monday. He praised the oil-producing Gulf Arab states’ partnership with the US, saying: “We share a belief about energy policy.”
Burgum said, “People have talked about climate as an existential threat. Again, to help people understand U.S. energy policy, we’re focusing on two important threats. One is that Iran can’t have a nuclear weapon.” “But the other thing is that the free world cannot afford to lose an AI arms race. … You need chips, you need software models and you need more power.”
The average price of a gallon of gasoline in the US, a key economic and political indicator of the country, was $3.03 on Monday. Trump has also repeatedly criticized both OPEC+ and Saudi Arabia over the price per barrel issue, especially during his first term.
Meanwhile, the United States and the United Kingdom both imposed new oil sanctions targeting Russia over its war on Ukraine. Those sanctions targets included Rosneft and Russian oil company Lukoil, whose red-and-white logo hangs at the annual oil conference. The UAE has maintained close ties with Russia despite the war, but has acted as a key negotiator between Kiev and Moscow over a prisoner exchange.
“The Russia and Ukraine war is being funded by energy sales,” Burgum said at a forum that showed the Lukoil logo before his remarks.
Climate change concerns have been left behind
The oil summit is taking place after the UAE hosted COP28. Those talks ended with a call by nearly 200 countries to move away from planet-warming fossil fuels – the first time the conference has made this significant pledge. Scientists have called for cutting the world’s emissions by about half in the coming years to limit global warming to 1.5 °C (2.7 °F) compared with pre-industrial times.
But the United Arab Emirates still plans to increase its production capacity of oil by 5 million barrels per day in the coming years as it pursues more clean energy at home.
Qatar’s Energy Minister Saad Sherida al-Kaabi reiterated a warning to the European Union that his country could block its liquefied natural gas shipments over its Corporate Sustainability Due Diligence Directive – which is critical because of sanctions on Russian LNG. Its aim is to motivate companies to achieve net-zero emissions targets.
“I think, you know, a small part of this conference, unfortunately, changes with politics based on President Biden and President Trump and so on,” Al-Kaabi said. “I think they are not looking at the facts and realities and I think we should not be following politics when we look at people’s lives for the future and how much energy we need in the future.”