H.E Al-Mazrouei says: “Most of the participants in the oil agreement support the idea of a long-term alliance”
Friday, April 13, 2018
"The majority of OPEC members and independent oil producers participating in the current agreement to cut crude supply support the idea of a long-term alliance between producers," said yesterday H.E Suhail Al-Mazrouei, the Minister of Energy and Industry.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers from outside the organization began cutting output in January 2017 in an effort to dispose of the global inventory of raw materials produced since 2014.
OPEC and its 24 partners have extended the deal by the end of 2018 and are considering an agreement to extend their alliance for years or even decades.
"I think the idea in itself appeals to the majority of countries," H.E Al Mazrouei said on the sidelines of the World Energy Forum.
"The ultimate goal is for this group is to work together for a longer period than the two years we work in together," he said.
The talks raised the possibility that producers would expand their moves to boost oil prices by cutting or reducing production by pumping more after the supply cut expires this year.
"The producers are trying to elaborate the details of the agreement," Al Mazrouei said, noting that it may not include an item on reducing or increasing oil production.
Asked about the coalition's goal, he said: "The goal is to build on the progress that has been made since the start of the agreement on the exchange of information and confidence-building."
"The aim is that this group of responsible producers should be on continuous communication and to monitor the market collectively," he said. "Over the past two years, the strengthening of communication has helped to overcome misunderstandings among the oil-producing countries."
"I think the level of trust between us has increased a lot, we contact each other, and the Ministers and the concerned people with the technical and commercial aspects in those countries are also in direct contact," he said.
OPEC Secretary-General Mohamed Barkindo said yesterday that he expects the return of balance to the world oil market in the second quarter or third quarter of 2018, rather than at the end of the year as it was previously estimated.
In an interview with Reuters in New Delhi, Barkindo said there was a growing confidence that oil producers would extend their cooperation agreement after 2018. He said Russia would continue to play a key role in the future market balancing deals. "There is growing confidence that the declaration of cooperation will be extended after 2018," Barkindo told Reuters. "Russia will continue to play a major role," he said.
He pointed out that the initial draft of a longer-standing alliance between the Organization of the Petroleum Exporting Countries (OPEC) and independent oil producers will be discussed during the two sides' meeting in June. OPEC revised its forecast for production growth from its competitors in 2018, nearly three times more than its adjusted global oil demand growth forecast.
"Oil supply from independent producers is expected to grow by an additional 80,000 bpd this year to 1.71 million bpd, led by more than expected growth in the first quarter in the United States and the former Soviet Union," she said.
At the same time, OPEC has increased its forecast for global oil demand growth this year. By 30 thousand barrels per day, to 1.63 million barrels per day.
OPEC said in its monthly market report: "This reflects primarily the positive momentum of the Organization for Economic Co-operation and Development (OECD) in the first quarter of 2018, on the back of better-data than forecast, and with the support of the industrial developments, the colder weather than expected, the stronger mining activities in OECD countries; and also from the economic and development in the Americas and the Asia-Pacific region”.
"The total production by secondary sources fell by 201,000 bpd to 31.96 million bpd in March, led by the declines in Angola, Algeria, Venezuela, Saudi Arabia and Libya," the 14-members Vienna-based organization said.
Venezuela stated that: "Its production amounted to 1.509 million barrels per day in March, less than 77 thousand barrels per day from the level announced in February."
OPEC, Russia and other non-OPEC producers began cutting supplies in January 2017 in an effort to dispose of global stockpile inventories since 2014. The cut-off agreement runs until the end of this year. OPEC is due to hold a meeting in Vienna next June to decide on its next step.
In the same context, oil prices have fallen from their highest levels since the end of 2014 due to abundant supplies, although fears of a military escalation in Syria and trade tensions between China and the United States are supporting prices.
By 09:02 a.m. GMT, Brent crude futures were down 36 cents from the last settlement to $ 71.70 a barrel.
WTI US Median futures fell 20 cents to $ 66.62 a barrel.
* Source: Al Etihad - translated by MOEI