(MENAFN- Khaleej Times) Global crude oil prices are currently at a "fair and appropriate level" and pose no threat to economic growth, UAE Energy Minister Suhail bin Mohamed Faraj Fares Al Mazrouei said on Monday.
The minister, before leaving for his first Opec meeting in Vienna on May 31, said the recent fall in prices was a short-term phenomenon that had nothing to do with market fundamentals.
Al Mazrouie said the current price level still provided oil producers an incentive to press ahead with their ongoing investments to boost production capacity.
He pointed out that the UAE is investing billions of dollars in development projects to raise oil output capacity to 3.5mbpd by 2017 from the current 2.8mbpd.
"As for consumers, the current price level does not adversely affect economic recovery and growth in the future, therefore we see it as appropriate," said Al Mazrouie told Wam. "What concerns us in the UAE is a balance in the supply and demand equation," he said.
Al Mazrouie said that the Opec currently produces 30.4 million bpd, slightly higher than its targeted output, but the figure reflected the persistent demand for Opec crudes.
He noted that the world economy was improving and was projected to grow by 3.2 per cent. "It is likely that world oil demand will remain relatively weak during 2013, with an increase of nearly 800,000 bpd over 2012's demand level. Demand for oil is expected to grow in 2014 if world economic growth persisted," he added.
Al Mazrouei, who was appointed oil minister in March, also said the UAE, which sits on 97.8 billion barrels of proven oil reserves, plans to produce 25 per cent of its power needs from nuclear energy by 2021. The UAE is building four nuclear plants that are expected to produce a total of 5,600MW. The Opec, which is meeting to decide on its crude production targets, this month raised its strongest concerns this year about the potential weakening of Chinese oil demand.
The output decision has been given extra significance by the sharp slide in oil prices to below $100 a barrel last month - a level many members say is the minimum fair price for their exports.
Opec members who account for 40 per cent of global oil supply will need to cut production to hit the official target of 30 million barrels a day.
Total Opec output rose by 280,000 barrels a day in April to 30.46 million barrels a day.
Annual nominal average world oil prices rose more than four-fold on average in the decade from 2002 from $25 a barrel to a record $111 a barrel in 2012. This year on average to date they are down, if only a little, and Brent was trading at just over $102 a barrel on Friday. An International Energy Agency report released earlier this month forecast US shale oil supply will help meet most of the world's new demand in the next five years, leaving little room for the Opec to lift output without risking lower prices.
The total oil and gas export earnings of the six-member GCC collectively increased to $737.5 billion in 2012 from $695.9 billion the previous year, according to the Institute for International Finance, or IIF.
Saudi Arabia's oil export earnings rose to around $351 billion last year from $326 billion in 2011, while the UAE's income grew to nearly $124.7 billion from $119.2 billion in the same period.
"It was the highest income from oil sales in the GCC's history and more than double their oil revenue of nearly $305 billion in 2005,' the Washington-based IIF said in a study. The report also showed higher earnings boosted the GCC's current account surplus to about $375 billion in 2012 from $328 billion in 2011.
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