Suhail Al Mazrouei (the UAE Energy Minister) reported today that the global oil industry has suspended most projects that were set to be implemented because of the reduction in crude prices which caused a risk of a slump in output as well as a potential shortfall in supply.
A decreased investment in oil production might likely to affect supply in the future. “This is what we are concerned about. The number of postponed projects is massive” Al Mazrouei.
In June 2014, Brent crude cost about $115 a barrel but January this year, there has been a decline of about 50% ($48). This decline forced explorers to delay projects, eliminate jobs as well as cancel billions of dollars’ worth of investments. Patrick Pouyanne (Chief executive officer of Total SA- France’s largest oil company said in a statement that the cuts in investment is causing a threat which is expected to create an oil shortage by 2020.
“We in the UAE are trying not to postpone projects in a major way All projects around the world should be equal to the amount of demand. Oil supply and demand are moving closer to a balance” Al Mazrouei said.
The UAE is a member of the Organisation of Petroleum Exporting Countries. The reduction in prices of oil came to existence when the organisation accepted a policy of pumping limits to squeeze higher cost supply which includes some US shale output from the market.
According to the head of the US Energy Information Administration, US oil production is expected to drop and it’ll be its first drop in eight years.