As crude oil
producers seek to reduce oversupply and support prices, the energy
ministers of the Organisation of Petroleum Exporting Countries (OPEC)
and non-OPEC countries yesterday stated that the two groups had made a
strong start to reducing their oil output under the first such pact in
more than a decade.
Eleven of OPEC’s 13 members along with 11 non-OPEC countries have agreed to make cuts for the first half of the year.
However, OPEC members – Nigeria and Libya, both suffering setbacks in production, were given exemptions.
Reuters
reported that the ministers said 1.5 million of almost 1.8 million
barrels per day had been taken out of the global oil market already.
“The deal is
a success …All the countries are sticking to the deal …(the) results
are above expectations,” Russian Energy Minister, Alexander Novak,
reportedly said after yesterday’s first meeting of a committee set up to
monitor the deal.
Countries
involved in the deal could reduce their output by 1.7 million bpd by the
end of the month, Interfax news agency quoted Novak as saying.
‘The Kingdom
of Saudi Arabia has taken the initiative and other countries took part
in very significant actions,” Saudi Energy Minister Khalid al-Falih told
reporters following the meeting.
“Despite
demand usually being lower in the first quarter in winter, the actions
taken by the Kingdom and many other countries have impacted the market
in a tangible way and we have seen the impact in spot prices,” al-Falih
added.
Brent oil
prices that fell to $27.10 a barrel a year ago have held above $50 per
barrel since OPEC producers agreed on December 10, 2017 to lower output
in the first half of 2017.
The cuts are aimed at reducing a global glut in oil that has weighed on oil prices for more than two years.
Falih said implementation of agreed cuts had been “fantastic” and he hoped for 100 percent compliance in February.
“We will not
accept anything less than 100 percent compliance,” Kuwaiti Oil
Minister, Essam Al-Marzouq, who chairs the five-member ministerial
compliance committee, told a news conference.
The other members of the committee represent Algeria, Venezuela, Russia and Oman.
Venezuela has achieved more than half of its planned 95,000 bpd cut, Oil Minister Nelson Martinez told Journalists.
Full
compliance could take global oil inventories back close to their
five-year average by mid-2017, lowering oil in storage by around 300
million barrels, Falih said.
“[There are]
no surprises so far in terms of demand or supply from other sources so
there is no reason for us to suddenly come in January and say we need a
bigger reduction or a longer period,” he said.
Saudi Arabia
is producing slightly below 10 million bpd and has informed buyers of
substantial cuts scheduled for next month, he said.
Russia has
cut its oil output by around 100,000 bpd, Novak said, double what was
originally planned. He said Russian oil production had averaged around
11.15 million bpd this month.
He told
Journalists it was too early to talk about extending the current deal
beyond the planned six months but that remained an option.
“Everyone
sees that the agreements on oil production cuts have already have a
positive effect on oil markets. The market has become more stable and
predictable,” Novak said.
It was
agreed yesterday that a technical joint committee (JTC) would be created
comprising a representative for each of the five members of the
monitoring committee and as well as the OPEC presidency, which is
currently held by Saudi Arabia.
The JTC will
cooperate with the OPEC Secretariat in compiling production data which
will be presented to the ministerial monitoring committee by the 17th of
every month, OPEC said in a news release.
The
monitoring committee will communicate after the 17th of every month and
plans two meetings ahead of the next ordinary OPEC meeting in Vienna on
May 25.
The next meeting in March is set for Kuwait.
By Ejiofor Alike/Thisdaylive
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