Barkindo Says Oil Cuts Only Option to Stabilize Market

The oil market is rebalancing at a quickening pace and production cuts are the “only viable option” to restore stability, OPEC Secretary-General Mohammad Barkindo said.

“We are seeing clear indications that the market is rebalancing at an accelerating pace and stability is steadily returning,” Barkindo said in a conference in Abu Dhabi, the UAE, on Monday, Bloomberg reported.

“I am certain that if we had not mobilized ourselves when we did, building consensus and jointly taking action in responding to the crisis, the industry would be in worse condition than it is today.”

He added that global production curbs are the “only viable option” to restore stability to the oil market.

Barkindo also said that in its monthly market report on Monday, OPEC will raise its estimate of oil demand growth to “above 1.5 million barrels a day” for both 2017 and next year. Stockpiles have declined by more than 180 million barrels this year alone, he said.

"The Organization of Petroleum Exporting Countries should decide at its meeting later this month whether or not to extend the cuts," UAE Energy Minister Suhail Al Mazrouei told the same conference in Abu Dhabi.

This is while top producers such as Russia and Saudi Arabia had earlier announced their intention to renew the deal on cuts.

"Neighboring Oman backs prolonging the output limits beyond March and sees producers extending them until the end of 2018," Omani Oil Minister Mohammed Hamad Al Rumhy told reporters.

Output cuts by OPEC and other producers such as Russia and Oman have started to pay off, with Brent crude prices trading close to a two-year high. OPEC will meet in Vienna on Nov. 30 to review the pact, which took effect in January, and possibly extend it.

Iraq has also signaled its willingness to extending the curbs.

Mazrouei affirmed that view, saying that coordinated cuts by OPEC and suppliers outside the group have helped trim crude inventories from record storage levels.

"The UAE, OPEC’s fourth-largest producer, sees no need for the organization to hold an extraordinary meeting in the first quarter of next year," he added.

“I am optimistic about the whole of 2018,” which will be a recovery year for oil markets, he said in a speech at the Abu Dhabi conference.

US shale output, a contributor to the global glut, has responded more slowly than expected to the recent increase in crude prices.