The Gulf Intelligence UAE Energy Forum traditionally kicks off the year in the oil and gas business, but with its 10th anniversary coinciding with an exceptionally volatile time in the Middle East, yesterday’s event faced a host of worrying distractions.
As delegates gathered at the campus of New York University in Abu Dhabi, all the buzz was about the overnight missile strikes by Iran on Iraqi and US military bases. What were the casualties? How would President Trump respond? Was this the beginning of the often-predicted escalation in retaliation for the killing of Qassem Soleimani last week?
Then, while these fears were being aired over breakfast coffee, came news that a Ukrainian aircraft had crashed on takeoff at Tehran in a fireball, and that there were very likely no survivors. It appeared for a moment that the shooting war had started.
When Suhail Al-Mazrouei, UAE energy minister, took the stage at the plenary session, on the dry-as-dust topic “Outlook for the Year Ahead,” many in the packed hall were anxiously staring at their phones for further updates from Iran.
His performance was as reassuring as it was possible to be in the circumstances. “We cannot control war or tensions, but we can control oil supply,” was his message, acting as a spokesman for the Gulf energy community.
“The Organization of the Petroleum Exporting Countries (OPEC) and OPEC + had efficiently managed oil supplies for the past year, and global crude levels were hovering around the 5-year average that has been the goal of Saudi and other OPEC members for some time,” he said.
But he came to the crux of it when he talked about the escalation between the US “an ally,” and Iran a mere “neighbor.” If it came to any action that threatened to halt supplies through the Strait of Hormuz, it could lead to a catastrophic situation for the global economy. “The world could not sustain another $100 plus oil spike,” he warned.
Mohamed Barkindo, the secretary-general of OPEC, was on stage next, and agreed that a war in the Gulf would be disastrous for the oil market and the global economy. “Brother Suhail” had assured him that regional leaders were doing all they could to help de-escalate the US-Iran confrontation, and he himself was committed to taking the politics out of the oil business in order to protect the “beautiful resource.”
The Iranian attacks seemed limited and not designed to provoke a bigger US retaliation; the crashed plane and the loss of life were tragic, but did not seem caused by hostile action.
He said that he had been surprised at the “relatively calm” oil market reaction to the latest crisis, which he said was proof that the OPEC and OPEC + arrangements were working well in the ultimate stress test.
Tribute was also paid to Prince Abdul Aziz bin Salman, the energy minister of Saudi Arabia, who has resumed the OPEC alliance with enthusiasm and had played a “noble role” in his few months in charge of the Kingdom’s energy policy.
Bin Salman had assured Barkindo that the status of Saudi Aramco as a listed company would not impinge on the affairs of OPEC, and that the Kingdom would continue the practice of “voluntary over-compliance” to oil production limits, the OPEC man related.
Nonetheless, Barkindo recognized that the security situation was critical, because of the fact that most spare capacity in oil markets was with the Gulf producers and any halt to transportation through Hormuz could quickly lead to global shortages and big price jumps.
The OPEC man even extended an invitation to Trump to join … the audience held its breath, half-expecting a formal invitation for the US to join the global oil producers’ cartel… but no. It was an invitation to join with OPEC in the “noble role and objective” of stabilizing oil prices.
By the time the forum broke for lunch, it was apparent that the overnight news was less grave than first thought. The Iranian attacks seemed limited and not designed to provoke a bigger US retaliation; the crashed plane and the loss of life were tragic, but did not seem caused by hostile action.
But any sense of relief among the delegates was strained. Even in the salubrious surroundings of NYUAD, all the lunchtime talk was of the “next big one.”