UAE Sees OPEC Considering Cuts Extension in November

UAE Sees OPEC Considering Cuts Extension in NovemberUAE Sees OPEC Considering Cuts Extension in November

OPEC may need to consider extending its oil-cuts agreement when the group meets in November, as crude markets are taking too long to recover, UAE Energy Minister Suhail al-Mazrouei said.

The Organization of Petroleum Exporting Countries, which already prolonged its cuts accord with other major producers through the first quarter of next year, may have to discuss a further extension, Al Mazrouei said in an interview with Bloomberg.

"Increased output from Libya and Nigeria, which are both exempt from cutting, is complicating OPEC’s effort to rebalance the market," he said.

“It looks like we may need to consider expanding the time horizon” of the output curbs, he added. “But that’s a decision that’s going to be discussed probably in our next meeting in November.”

The UAE is the fourth-biggest producer in OPEC, which plans its next ministerial meeting on Nov. 30.

The recovery in crude prices “will drag us into 2018”, he said. “Is it going to be the first quarter or the second half of 2018? We need to monitor that.”

OPEC needs more reductions in oil inventories and “some control of production from some of those countries which were not part of the deal,” he said.

Oil slumped into a bear market last month and Brent crude, the international benchmark, is trading at about $48, a gain of less than $2 since the cuts were agreed on last year.

While demand will be almost 2 million barrels a day higher in the second half of the year compared with the first six months, according to OPEC estimates, rising supply inside and outside OPEC suggests the cuts will not put a significant dent in bloated global inventories.

The committee monitoring compliance with the cuts recommended keeping an extension of the agreement beyond the first quarter of next year “as an option, should further action be required for the stabilization of the market”, according to a statement posted on the OPEC website after the committee met on Monday in St. Petersburg, Russia.

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