UAE minister says oil price volatility due to underinvestment in sector

Long term under-investment in oil and gas has left global markets more exposed to structural risks, a top UAE minister said on Monday.

“We are all witnessing first-hand how sensitive energy markets due to geopolitics shocks, yet the current volatility in oil prices is a result of a deeper underline structural issues,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology in the United Arab Emirates (UAE), the Managing Director and Group CEO of the Abu Dhabi National Oil Company during an energy conference on Monday.

According to the IEA, annual investment in oil and gas is $200 billion below what it must be, explained Al Jaber. That is just to keep up with demand until 2030. Demand is expected to reach pre pandemic levels in the fourth quarter of this year, explained the minister. 

“While we fully embrace energy transition, we need to recognize that policies should be tailored to real world scenarios and they should follow the basic rule of progress, that if we fail to plan we will definitely fail,” he said.

Dr Al Jaber added “we cannot and must not unplug the current energy system, before we build the new one.”

The UAE Minister said that Europeans and Americans have begun to come to terms with these realities and acknowledge that transition will take time.

“We are increasing investments in low carbon and no carbon energy sources,” he explained the UAE position towards energy transitions.