United Arab Emirates Energy, OPEC’s fourth-largest oil producer, is leading an effort to prolong cooperation with Russia and other allies far beyond the expiry of their joint supply cuts this year.
Suhail Al Mazrouei, UAE’s energy minister in an interview with Bloomberg television said: “My hope is for it to last forever.” By working together they can “prepare for any unforeseen surprises in the market, to avoid any glut or any shortage of supply.”
The global oil market is finally recovering from several years of oversupply, in large part because of joint output cuts by the Organization of Petroleum Exporting Countries and a number of other major producers.
While the glut could dissipate as soon as the second quarter, nations including Saudi Arabia are signaling they want the cooperation to continue to at least the end of 2018, and potentially much longer.
“The group of 24 countries together are making a contribution to the supply and demand balance,” Mazrouei said after giving a speech at the International Petroleum Week conference in London. “Russia is a critical country in this group, as well as Saudi Arabia, as well as the U.A.E., as well as many other countries.”
As the current president of OPEC, Mazrouei said his role is to “try to draft a charter of how we are going to continue working together, for the sake of better economic growth and for the sake of ensuring that we have an adequate supply.”
A draft exists, but OPEC is not yet ready to share it, Mazrouei said. Ministers will discuss and hopefully agree on the charter later this year, but that may not be possible, he said.
Meanwhile, Oil prices on both sides of the Atlantic traded in opposite direction on Tuesday, with the US oil (WTI) supported on supply disruption while Brent trades on the back foot amid broad-based US dollar strength after Barkindo Mohammad, OPEC Secretary-General said on Monday that global oil demand for 2018 is estimated to grow 1.6 million barrels per day due to an “encouraging environment.”