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Oil producers should build a cushion of overcapacity to prepare for future shocks in the oil market, UAE Energy Minister Suhail al-Mazroui has urged, speaking at a conference in Abu Dhabi.

The UAE is aiming to increase its production to 3.5 million barrels a day (b/d)  by 2018, but has agreed with Opec to limit production to 2.87 million b/d in the first half of 2017 – a deal that is likely to be extended for at least another six months.

“Here in the UAE we are expanding our production capacity,” Al-Mazroui said, speaking at the EIC Connect Oil & Gas conference in Abu Dhabi on 23 May. “Building a cushion of overcapacity to be produced when needed is something that we should always have as major producers because we never know when we are going to have that shock in the market.

“The agreement to stop the overflooding of the market and achieve a balance… I think it has been working for the first five months and I’m sure if we continue it will even be better for businesses to come back and get contracts.”

He added that the downturn in the oil price has been tough on the industry, especially on contractors. “The industry has squeezed you and you have proven to be resilient,” Al-Mazroui said.

The energy minister was speaking hours before he is due to fly to Vienna for a meeting of Opec representatives. The 13-strong bloc of oil exporters will discuss whether to extend the existing production cut and agree on the depth and the length of the possible output reduction.

The decision is likely to have a significant impact on oil prices, with Brent crude trading at $53-$54 a barrel as of the morning of 23 May.

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