We have devised certain marketing strategies with consumer nations with long term strategies, says Opec governor.

Volatility in oil prices is mainly due to global trade war, geopolitical concerns, currency issues and protectionism policies rather than supply and demand issue, industry executives and officials said on Monday.

Sultan Ahmed Al Jaber, UAE Minister of State and CEO of Abu Dhabi National Oil Company (Adnoc); Mohammed Hamad AI Rumhy, Minister of Oil and Gas, Sultanate of Oman; and Mohammad Barkindo, secretary-general, Organisation of the Petroleum Exporting Countries (Opec); speaks during a panel discussion at the opening of the Abu Dhabi International Petroleum Exhibtion and Conference in Abu Dhabi on Monday. - Photos by Ryan Lim

Mohammed Hamad Al Rumhy, Oman's Minister of Oil and Gas, said volatility has been on the rise over the years.

"Around 15 years ago, it was only supply-demand factor that dictated the oil prices; then other factors came in such as currency issue. Then, we started to hear stories of hedge funds having impact on movement of prices followed by geopolitics. It is difficult to quantity impact of currency movement, political situation, decision coming from White House and stock markets factors on the oil prices," Al Rumhy said during a panel discussion at Adipec 2018 conference.

He noted that the producers and consumers will never agree on a single price. "It is extremely difficult to satisfy everyone and that is what is happening right now. It is extremely dangerous phase when investors take away trillions of dollars in investments when the oil price is too low... Let us engage with each other and discuss rather than using social media tools to say what is right and what is not."

Dr Ayed S. Al Qahtani, director, Research Division, warned that trade war and protectionism is not favourable for economic growth and oil prices. Tarek El Molla, minister of petroleum and mineral resources, Egypt, emphasised on maintaining the demand-supply balance and proper pricing over a long period of time because volatility will impact both producers and consumers.

"At the end of the day, no oil-producing country will put strategic plans in place due to volatility and consuming nations cannot budget until they don't see the long term prices."

Citing factors beyond oil-producing nations, he blamed global politics, speculators and stock exchanges for the volatility.

Haitham Al Ghais, Opec governor for Kuwait, pointed out that trade tariffs not only affect physical trade but consumer confidence also and it has ripple effect.

He said the oil demand is slowing down as International Energy Agency and Opec have revised own their numbers for the next year.

"It is alarming, so we have devised certain marketing strategies with consumer nations with long term strategies. I hope it doesn't prolong further because it will create worse environment for oil prices in 2019."

- waheedabbas@khaleejtimes.com