ABU DHABI, United Arab Emirates
(AP) -- On stage only a short time after the United Arab Emirates said
it would increase its oil production despite low worldwide prices, the
oil and gas minister of neighboring Oman didn't pull any punches.
"This
is (a) man-made crisis in our industry we have created. ... And I think
all we're doing is irresponsible," Mohammed bin Hama al-Rumhy said as
his Emirati counterpart forced a smile next to him.
Even
among friends, the bottoming-out of oil prices, which are down more
than 50 percent since the middle of last year, has strained both budgets
and relationships across the Gulf and other oil-producing countries.
And
while Emirati officials at the annual Abu Dhabi International Petroleum
Exhibition and Conference said Monday they believed prices will head
back up into next year, others offered a more pessimistic view.
"It's
a movement of an era of scarcity to one of abundance; it's a movement
from a world of unexpectedly strong demand and tight supplies to a world
of ample supplies — even oversupplies — and weaker demands," said
Daniel Yergin, vice chairman of IHS and the author of a Pulitzer
Prize-winning book on the history of oil.
"OPEC's
not the only balance of the market. The United States is back in the
role of swing producer, a role it hasn't exerted in six decades," he
said.
Fluctuating
oil prices are nothing new, but this time the U.S. has found itself
roaring back into the industry with the mass production of shale oil and
reduced dependence on imports.
U.S. shale, a
weakening economy in China and other factors have pushed prices down. On
Monday, Brent crude, a benchmark for international oils, was at $47.63
in London, down from well over $100 a barrel last year.
While
the U.S. production has dialed back due to low prices, even more oil
will soon enter the market, including an expected flood of Iranian
exports once sanctions are lifted under a landmark nuclear deal.
Despite
that, the Emirati energy minister said he believed prices would rise in
2016, even as he said his country planned to ramp up production to 3.5
million barrels of oil a day from a current 2.9 million.
The
Emirates was the world's sixth-largest oil producer in 2014, according
to the U.S. Energy Information Administration. That 3.5 million barrel
production will come in the "next two to three years," said Abdulla
Nasser al-Suwaidi, the director-general of the Abu Dhabi National Oil
Co.
"We are
hopeful that we will see in 2016 ... a correction," Emirati Energy
Minister Suhail Mohamed al-Mazrouei said. "Don't ask me how big, that's
for the market to decide. Don't ask me who is going to play that role.
It's not going to be OPEC only. This is an international effort.
Everyone has a role to play."
But
speaking in Qatar at the same time, Saudi Prince Abdulaziz bin Salman
bin Abdulaziz, deputy minister of petroleum and mineral resources,
cautioned against making too many cuts amid the swing in prices.
"As
we saw back in 2008, high oil prices proved to be unsustainable, and
the price fell sharply following the great financial crisis. But this
works in the opposite direction," the prince said, according to a copy
of his speech carried on the state-run Saudi Press Agency. "A prolonged
period of low oil prices is also unsustainable, as it will induce large
investment cuts and reduce the resilience of the oil industry,
undermining the future security of supply and setting the scene for
another sharp price rise."
None
of that placates al-Rumhy of Oman, whose country is the biggest Mideast
oil producer outside of OPEC with around 1 million barrels a day. Oman
has been highly skeptical of OPEC, led by Saudi Arabia, which has kept
its own production high, further depressing prices.
"It's
like you and your wife at home, cooking for 10 people and you eat a
little bit and the rest of it you throw it in the dustbin," al-Rumhy
said. "I cannot justify that, that this loss is by the grace of God.
This loss is because we are not responsible. ... We are waiting for the
cyclone that is hitting us to change course. And it will not happen."
His
comments drew sustained applause in Abu Dhabi, with his Emirati
counterpart responding that the low prices are everyone's
responsibility. Yet even afterward, surrounded by reporters, al-Rumhy
kept up his criticism, while smiling and saying: "They're my friends."
___
Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellap
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