Abu Dhabi: Oil-producing nations are moving closer to ending a global glut and re-balancing the crude market, and the Organisation of Petroleum Exporting Countries (Opec) will decide next month whether to extend its cuts in output beyond June, the group’s secretary-general Mohammad Barkindo said.
Opec and other major producers are committed to reducing oil stockpiles, and all countries participating in a six-month deal to pare output are committed to restoring the market’s stability, Barkindo said at a conference in Abu Dhabi. Opec will decide at its meeting on 25 May whether to prolong the cuts it began making in January, he said.
“We are optimistic the policy measures have already placed us on the path of recovery,” said Barkindo. “Our collective action will continue to prove effective.”
Opec and several other producers, including Russia, agreed in December to pump less oil in an orchestrated effort to end an oversupply weighing on prices. Compliance with the cuts was more robust in March compared to the previous month, Barkindo said. Benchmark Brent crude has gained about 19% since the agreement, which took effect in January, and was 17 cents higher at $55.06 a barrel at 10:22 am in London.
It would be premature to talk about the possible participation of Opec members Iran, Nigeria and Libya in any extension of output limits, Barkindo said. Opec exempted Nigeria and Libya last year from cutting production, due to their internal conflicts, while it agreed to let Iran pump an additional 90,000 barrels a day to reach output of about 3.8 million.
Opec’s compliance with the cuts improved to 104% in March from 90% in February, while the rate for non-Opec producers in the deal increased to 64% from 38% over the same two months, the International Energy Agency (IEA) said in a 13 April report. Opec’s average compliance for 2017 is 99%, it said. Bloomberg