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Tue 31 May 2016 09:37 AM

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Oil could reach $60 this year, says UAE minister

Iraq to join Saudi Arabia, Kuwait, Iran and the UAE in increasing production in Q3

Oil could reach $60 this year, says UAE minister
UAE’s Minister of Economy Sultan bin Saeed al-Mansoori. (Getty Images)

The UAE’s economy minister has said the price of oil could exceed $60 this year, as demand begins to match output.

Speaking at a conference in Abu Dhabi, the UAE’s Economy Minister Sultan Bin Saeed Al Mansoori said the price of oil could continue its upward growth over the summer, with demand and production becoming more in line with each other.

"It’s possible for oil prices to reach $60 or more during this summer,” the minister said on Monday.

Oil prices exceeded $50 a barrel on Thursday, its highest since early October, but dipped back on Friday with analysts predicting range-bound markets for the next few months as supply outages slowly help to clear a glut of crude.

Al Mansoori's forecast were echoed by Mario Maratheftis, global chief economist at Standard Chartered, who told Bloomberg TV that crude will end the year higher than the predicted $60 a barrel.

“We’ve always been incredibly bullish on oil,” Maratheftis said. “We expected supply to collapse. Demand is still very strong. I would expect oil prices to keep rising.”

Meanwhile, Iraq will supply 5 million barrels of extra crude to its partners in June, industry sources familiar with the issue said, joining other Middle East producers by lifting market share ahead of an OPEC meeting this week. 

Iraq, which is the second-largest producer in the Organisation of Petroleum Exporting Countries, had already been targeting record crude export volumes from southern terminals next month of 3.47 million barrels per day. 

Saudi Arabia, Kuwait, Iran and the UAE, also plan to raise supplies in the third quarter. 

A recovery in global oil prices from 12-year lows to above $50 a barrel and rivalry between Saudi Arabia and Iran have dampened expectations that OPEC will rein in supplies at Thursday's meeting. 

While additional exports could make up for shrinking output and supply disruptions elsewhere, the new supplies also risk delaying a re-balancing of a global market still awash with oil. 

"OPEC is indeed increasing supplies, practising their market share first strategy," said Victor Shum, managing director of downstream energy consulting at IHS, referring to a Saudi-led drive to boost OPEC's production to take back market share. 

He said that additional oil from Saudi and Iraq may slow down a re-balancing of the global market, although this could be countered by supply disruptions from other places and strong seasonal demand. 

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