UPDATE 1-UAE energy minister sees no immediate risk to oil flow through Strait of Hormuz

The energy minister of the United Arab Emirates said on Wednesday he saw no immediate risk to oil traveling through the vital gateway of the Strait of Hormuz after Iran attacked bases housing U.S. forces in Iraq. The situation is not a war, and what is happening now should not be exaggerated, Suhail al-Mazrouei said on the sidelines of a conference in Abu Dhabi, the UAE capital.

"We will not see a war," he added. "This is definitely an escalation between the United States, which is an ally, and Iran, which is a neighbor, and the last thing we want is more tension in the Middle East." Iranian officials have said the missile strikes were a response to Friday's killing of top Iranian commander Qassem Soleimani in Baghdad.

Mazrouei said he saw no situation to provoke a fear of supply shortage, with demand healthy and global oil inventories hovering around the 5-year average. The Organization of the Petroleum Exporting Countries (OPEC) would respond to any possible oil shortages if necessary, but it also had "limitations", he said.

"We can't replace any quantity with the spare capacity we have." He stressed that he did not forecast any shortage unless the situation changed.

"We are not forecasting any shortage of supply unless there is a catastrophic escalation, which we don't see."