Oil at $50 a barrel is a “gift to the world” as prices should be low enough to spur economic growth, according to the head of Abu Dhabi’s Department of Economic Development.
Prices will probably be at $60 next year, after hitting bottom at $45, Ali Al Mansoori, the department’s chairman, said in an interview Sunday in the capital of the United Arab Emirates, the fourth-largest oil producer in the Organization of Petroleum Exporting Countries. Benchmark Brent crude has dropped 16 percent this year amid a global oversupply and was trading Monday at $47.98 a barrel at 11:55 a.m. London time.
“It is a gift to the world that oil has dropped to $50,” Al Mansoori said. “Would we like for oil to stay at $50? Absolutely not. We would like oil to go to $70, $80, but beyond that I think it would hurt the economic growth.”
Oil demand growth will climb to a five-year high of 1.8 million barrels a day this year before slowing next year amid a weaker outlook for the world economy, the International Energy Agency forecast in its October market report. The market will probably remain oversupplied through 2016 as Iran exports more crude, should international sanctions be eased, it said.
Oil at $50 to $60 a barrel is a “win-win situation” because it benefits consumers and producers alike, Al Mansoori said. For buyers, “it’s an opportunity for them now to use it as much as possible to set up their policies for economic growth in the next five years because ultimately the commodity is scarce.”
Declining oil prices will mean Abu Dhabi’s gross domestic product growth will be little changed next year, Al Mansoori said. The emirate is doing what it can to expand the economy, but “if we don’t, we take next year as a challenge and turn this challenge into opportunity and turn 2017 with strong growth,” he said.
Major projects in Abu Dhabi will continue. The Midfield Terminal Building at the Abu Dhabi International Airport is still slated to open in 2017, while a branch of the Louvre museum will open next year, Al Mansoori said. In addition, Al Mansoori said he’s meeting with architect Frank Gehry next month in Los Angeles to review the final design for the Guggenheim museum being built in Abu Dhabi, and move ahead with signing the museum’s contract.