There are signs that oil markets have tightened in recent weeks and will rebalance over time, according to Dr. Sultan Ahmed Al Jaber, UAE Minister of State and Group CEO of the Abu Dhabi National Oil Company, ADNOC
He was speaking on ADNOC’s “Virtual Majlis” on Thursday with Helima Croft, Managing Director and Global Head of Commodity Strategy at RBC Capital Markets, reports Emirates News Agency (WAM).
Broadcasted on ADNOC’s social media platforms, the virtual majlis is bringing together UAE government leaders and global experts to engage on the key issues facing the world today and provide actionable insights to topics ranging from how to rebuild the global and domestic economy, to what the post-COVID-19 workplace should look like.
Dr. Al Jaber said the world is in unchartered territory and right now, no one is in a position to predict exactly what the global economic recovery will look like. While this outlook remains unpredictable, Dr. Al Jaber highlighted reasons for cautious optimism in oil markets.
“When it comes to oil, there are signs that the market has tightened in recent weeks. The OPEC-plus agreement, voluntary cuts outside OPEC-plus plus, and production shut-ins are working together to start to rebalance the market. This will take time. As economies begin to open up, demand will follow, but the path to the next normal is not a straight line,” Dr. Al Jaber said.
OPEC and its allies, a group known as OPEC+, decided in April to cut output by 9.7 million barrels per day (bpd) for May and June, a record reduction, in response to a 30 per cent drop in fuel demand worldwide caused by the coronavirus pandemic.
On Tuesday, four sources told Reuters that OPEC and its allies want to maintain the 9.7 million bpd cut beyond June, when the OPEC+ group is next due to meet.
Dr. Al Jaber highlighted how ADNOC was reaping the benefits of its transformation over the past four years as it navigates this period of uncertainty.
“We are seeing the benefits of the steps we have taken on over the last four years. In fact, this crisis has highlighted just how forward-thinking our leadership’s guidance has been in directing this transformation. As a result, ADNOC is now far stronger and better positioned to manage the current market dynamics.
“Through our transformation, we have focused on what we can control and that is our costs. We’ve been laser-focused on being one of the lowest-cost producers in the world. And this has given us the flexibility and the resilience that we need at times like these. In this environment, we are continuing to work even harder to preserve our resources, and maximize our profitability,” Dr. Al Jaber said.
The pandemic has highlighted the importance of three key leadership qualities – Capability, Crisis Management, and Connectivity, he said.
“Fundamentally, the capability of every organization in keeping their people safe, and their operations running smoothly is being tested. At the same time, leaders are being measured against how well they manage a crisis, ensuring their organizations can run under stress. And then connectivity, how clearly leaders communicate to their people what they need to do to stay safe,” Dr. Al Jaber said.
Concluding the majlis, Dr. Al Jaber underscored the importance of business leaders conveying a positive, optimistic, and credible way forward, with humility and honesty. “It is essential to communicate a message of unity, that we are in this together and will find our way through together,” he added.