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Saudi Arabia Sees OPEC, Allies Cooperate Past 2018

The suppliers are seeking to clear a global oil glut and prop up prices.The suppliers are seeking to clear a global oil glut and prop up prices.

OPEC and non-OPEC producers should stick with their supply cuts throughout 2018 and continue to cooperate beyond that, oil ministers from Saudi Arabia and Oman said.

The crude market will take all of 2018 to reach a normal level, and oil ministers should not limit their efforts to this year, Saudi Energy Minister Khalid Al-Falih told reporters on Sunday in Muscat, Oman, before a meeting to assess compliance with the cuts, Bloomberg reported.

Russian Energy Minister Alexander Novak said ministers need to see how the market develops before deciding if there is a need to adjust production caps.

"The Organization of Petroleum Exporting Countries and its allies see merit in maintaining their output limits into 2019 and probably will not discuss an exit strategy from their cuts agreement when the committee monitoring compliance meets on Sunday," Oman Oil Minister Mohammed Al Rumhy told reporters.

Saudi Arabia’s Al-Falih said the market will not rebalance in the first half and ministers need to identify a normal inventory level more clearly before OPEC meets next in June.

Ministers from OPEC members, including Saudi Arabia, are meeting with counterparts from Russia and Oman in Muscat to assess compliance with the cuts deal that expires at the end of the year.

The suppliers are seeking to clear a global glut and prop up prices.

While benchmark Brent crude has gained 2.6% this month, US oil output is set for strong growth this year as prices rally, the International Energy Agency said on Friday.

The oil market will return to balance in the third quarter at the earliest if OPEC and its allies keep complying fully with their cuts and if production from Libya and Nigeria remains at December levels, according to people with knowledge of the matter.

Their assessment came from a meeting on Saturday of the joint OPEC, non-OPEC technical committee and was made for the joint ministerial committee meeting in Muscat.

Libya and Nigeria were left out of the initial output accord that took effect in January 2017, due to internal conflicts.

However, OPEC imposed caps on both countries in November. Nations participating in the output deal had a compliance rate of 129% in December and 107% for all of 2017, said the people with knowledge of the situation, who asked not to be identified because the information is not public.

Excess oil inventories have declined by 220 million barrels from a level of 340 million barrels in early 2017, Al-Falih said in a speech before the monitoring committee meeting.

 

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