Oil producers are optimistic that their ongoing re-balancing efforts on the oversupplied market may be achieved, but they may need to take further steps to sustain the recovery into 2018, Mohammad Barkindo, Secretary-General Organisation of Petroleum Exporting Countries (OPEC) said.
Barkindo noted Sunday in New Delhi that Saudi Arabia and Russia are currently leading consultations between the OPEC and other major suppliers about the future of their agreement to cut oil output. The pact expires in March, and oil producers are debating whether to extend it later into the year.
“There is a growing consensus that, number one, the re-balancing process is underway,” he said after meeting with Dharmendra Pradhan, Indian oil ministe, adding, “Number two, to sustain this into next year, some extraordinary measures may have to be taken in order to restore this stability on a sustainable basis going forward.”
However, Barkindo didn’t elaborate on what those additional measures could be and if they would include the main proposal currently on the table – an extension of the existing cuts by up to nine months – or something else.
Venezuela has suggested making deeper cuts, but that’s considered unlikely given the political challenges of getting all members to agree unanimously.
OPEC and allied producers agreed in December to pare output to clear a glut and bolster oil prices. The cuts have helped revive crude, which had fallen to half its 2014 peak. Russian President Vladimir Putin last week said the country is open to extending the cut deal to the end of 2018. OPEC plans to meet on Nov. 30 to assess the market and its production policy.
Brent crude, the benchmark for more than half of the world’s oil, was little changed at $55.32 a barrel by 10:43 a.m. in London. Prices fell 3.3 percent last week, the steepest weekly drop since June, and are down about 2 percent this year.
The 24 producers that agreed to pump less oil are looking forward to welcoming additional participants in the accord, Barkindo said, without identifying any possible newcomers. “At the moment, there is no talk of an extraordinary meeting” beyond the session scheduled for next month in Vienna, he said.
United Arab Emirates Energy Minister Suhail Al Mazrouei said he’s optimistic that the next OPEC meeting will lead to a consensus between the group and its non-OPEC partners that will help balance the market in 2018, according to a tweet. The production cuts have led to a decline in crude inventories and a better balance in the oil market, he said.