No need to panic over $70 oil price: UAE Energy Minister

The UAE's minister of energy Suhail Al Mazrouei said on Friday there was “no need to panic" after oil prices hit $70 a barrel for the first time in three years.

Oil markets need to evaluate yearly averages rather than any upward trends in price, Mr Al Mazrouei said.

“We don’t look at the price in a day and say we need to make changes. We need to look at averages," the energy minister said at conference in Abu Dhabi.

"I don't think we're hugely far apart when it comes to the prices. We were at $64 or $62 or $69, I think it's the nature of the demand, I don't think any fundamentals have changed in the nature of the demand. We don't need to panic. We need to wait, give the market time little bit more time," he added.

There has been some speculation that with oil prices responding to Opec's output restraint strategy that some producers would now loosen the taps to take advantage of the potential higher revenues.

Brent crude futures reached a three-year high of $70 a barrel late on Thursday, on the back of production cuts by Opec and members outside of the cartel to the glut triggered by the growth of US shale oil.

Prices have also been supported by concerns that supply disruptions could stem from rising political tensions in Opec members Iran and Venezuela. In November, the UAE, along with its fellow Opec members and producers outside the group led by Russia, agreed to extend production curbs of around 1.8 million barrels per day (bpd) to reduce oil inventories that have weighed down the price of the commodity since 2015.

"We need to wait we still have a little bit more than 100 million barrels to be removed and until then we can't talk about price," added Mr Al Mazrouei, who is speaking at the Global Energy Forum, the second hosted by Atlantic Council in the capital.

Oil's latest rally is backed by strong demand growth and a fall in oversupply on the back of the Opec-led supply cut pact with geopolitics playing a minimal hand in supporting its growth, said Mr Al Mazrouei, who recently assumed the presidency of Opec.

“The market fundamentals drive the price and what’s happening in Iran and certain countries have a certain component but they’re not driving the prices."

Oil prices stabilised in 2017, picking up in the latter half of the year. Prices were bolstered by the turbulent aftermath of the Kurdish independence referendum in September, together with supply disruptions stemming from the closure of a key North Sea pipeline for emergency maintenance.

Opec is looking to stem the return of shale oil into markets to avoid a repeat of the excessive stock build-up that collapsed prices between 2015 and 2016, when prices fell from $100 highs to just below $28 per barrel in early 2016.

Mr Al Mazrouei, however, seemed unconcerned about the return of US shale into the markets saying independent operators in the US were seeking profitability over investment.

"We need to give it time, when the prices go up, the services companies and the nature of the investments have changed, they’re looking at profit," he said.