BAKU: OPEC Secretary General Haitham Al-Ghais on Wednesday told the COP29 climate summit in Baku that crude oil and natural gas were a gift from God, and that global warming talks should focus on cutting emissions not picking energy sources. The comments came as world governments seeking to limit the damage from global warming gathered in the Caspian Sea nation of Azerbaijan to hash out a sweeping finance deal meant to help countries cut emissions and adapt to the changing climate.

“They are indeed a gift of God,” Ghais, a veteran Kuwaiti oil executive, said about oil and gas in a speech at the conference. “They impact how we produce and package and transport food and how we undertake medical research, manufacture and distribute medical supplies. I could go on forever.”

His words echoed those of Azerbaijan President Ilham Aliyev, who used his opening address to the summit last week to hit back at Western critics of his country’s oil and gas industry, and who also described those resources as a gift from God. Ghais said that world governments, which had agreed to limit planetary warming to 1.5 degrees Celsius above pre-industrial levels at the 2015 summit in Paris, could pursue their climate targets without shunning petroleum. “The focus of the Paris Agreement is reducing emissions, not choosing energy sources,” he said.

The Organization of the Petroleum Exporting Countries (OPEC) has said that technologies like carbon capture can tackle the climate impact of burning fossil fuels. Mohamed Hamel, Secretary General of the Gas Exporting Countries Forum (GECF), a grouping of gas exporter nations, also spoke to the conference on Wednesday in support of fossil fuels.

“As the world’s population grows, the economy expands, and human living conditions improve, the world will need more natural gas, not less,” he said. He added that he hoped that a COP29 deal on international climate finance would allow support for natural gas projects to help countries transition away from dirtier fuels like coal. “The outcome of COP 29 should facilitate financing for natural gas projects and scaling up cleaner technologies such as carbon capture, utilization and storage,” he said.

“This is crucial for ensuring just inclusive and orderly energy transitions that leave no one behind.”

Meanwhile, OPEC+ will have little room to maneuver on oil policy when it meets in December: it would be risky to increase output because of weak demand, and difficult to deepen supply cuts because some members want to pump more, sources and analysts said. OPEC and its allies led by Russia, the group known as OPEC+, which pumps around half the world’s oil, has already delayed a plan to gradually lift production by several months this year. It may push back output increases again when it meets on Dec 1 due to weak global oil demand, according to three OPEC+ sources familiar with the discussions. Ministers last shelved the increase for a month when they met virtually on Nov 3.

OPEC+ had planned to slowly roll back production cuts with small increases over many months in 2024 and 2025. But a slowdown in Chinese and global demand, and rising output outside the group, have put a dampener on that plan. This has left OPEC+ maintaining output cuts for longer than it had thought. The group has cut output by 5.86 million barrels per day, or about 5.7 percent of global demand, in a series of steps agreed since 2022 to support the market.

Despite OPEC+’s cuts and delays to output hikes, oil prices have mostly stayed in the $70-$80 per barrel range this year. Saudi Arabia was keen to address an internal issue of poor compliance with production targets from some OPEC+ members, sources said, before proceeding with any output increase for the group. Some members including Iraq have reduced output in recent months, so compliance has improved. That could give the group a little room for a coordinated small increase in supply – as long as demand supports it.

Increasing output in a market with little demand growth, however, would risk weakening prices. It is a tactic OPEC+ could use to put pressure on rivals - but one that would also hurt OPEC+ countries that rely on oil revenues. Many OPEC members need a price of over $70 to balance their budgets and could not sustain a long period of oil below $50.

Nonetheless, OPEC+’s falling market share has led to speculation that sooner or later, it may launch a price war to push rivals out. The last time OPEC did this was in 2014-2015, when it raised output to squeeze US shale firms. OPEC+’s oil output is equal to 48 percent of world supply, the lowest since it was formed in 2016 with a market share of over 55 percent, according to Reuters calculations based on International Energy Agency figures.

The US has become the world’s largest oil producer, pumping more than 20 million bpd or a fifth of global production. Top OPEC producer Saudi Arabia’s crude output is less than 9 percent of the global oil total, while OPEC supplies around 25 percent. The 2014 price war had a big impact on shale producers but ultimately failed to stem the boom. US shale and other producers have also cut costs over time, making it harder for OPEC+ to win a new battle.

The cost of producing oil onshore in the Middle East has an average breakeven price of $27 a barrel, according to consultant Rystad Energy. Rystad puts North American costs at $45, down from $85 in 2014. Consolidation in the US oil industry would also make it harder for OPEC+ to win a price war. In the past two years US majors Exxon Mobil and Chevron have bought some of the biggest shale producers. They have deep pockets and diverse portfolios.

Analysts at Macquarie said the prospects for OPEC+ increasing output in the first half of 2025 looked tenuous given seasonal demand weakness. Deepening production cuts is also unlikely because several OPEC+ members are pushing to pump more, not less. Key among them is the United Arab Emirates, which argues it has kept output at around 3 million bpd for too long, far below its capacity. The UAE has already secured an increased quota for 2025, and any delay to output hikes would need to address this issue, OPEC+ sources said. Iraq has also been pushing for a higher quota. – Reuters