'It's too early to talk of Oman's oil pact exit plan'

Energy Sunday 14/January/2018 22:00 PM
By: Times News Service
'It's too early to talk of Oman's oil pact exit plan'

Muscat: It is too early to discuss an exit strategy for leaving the Organisation of the Petroleum Exporting Countries (OPEC) oil reduction agreement, even as oil prices are rising, an official from the Ministry of Oil and Gas (MoG) said.
Speaking at the pre-OPEC 7th Joint Ministerial Monitoring Committee (JMMC) meeting press conference, Ali Al Riyami, director general of marketing at MOG, explained that oil prices are expected to remain above $60, if the participating countries abide by the cuts, so it is premature to talk about exit strategies.
“We need to see the continuation of this deal and, currently, it is too early to talk about an exit strategy. If we are able to continue with these levels of conformity, we will be able to sustain an average oil price of $60- $65,” he said.
Oman is one of the non-OPEC nations participating in the output reduction agreement that was reached in Vienna in November 2016, after record outputs saw a barrel of oil fall to $26 early in 2016. Prices have since rebounded to hit a three-year high last week, thanks to compliance from some countries, as compliance with oil reductions reached more than 100 per cent.
“Around 70-80 per cent of this price rise is driven by fundamentals of supply and demand, while the other 20 per cent is driven by geopolitics and weather conditions. We are very happy with the rise in prices and we find that the deal is the only way to keep prices this way. I think everyone is working hard to reach high conformity levels. Some countries have seen as high as 120 per cent conformity levels. We too are trying to conform to 100 per cent or more,” Al Riyami added.
This is the first time Oman is hosting an OPEC meeting, as they are rarely are held outside OPEC countries. Most meetings take place at OPEC headquarters in Vienna. This meeting will be held to monitor compliance and review the oil market.
“These are performance meetings held every two months. We will have a technical review meeting on the 20th and the JMMC meeting on January 21. We will review conformity, market fundamentals, and the effect of oil prices on shale oil. This is the first meeting of 2018, and we hope to start the year well,” Al Riyami noted.
Oman reached an average daily production of one million barrels for the first time in history in 2016. However, production has been frozen at 970,000 barrels per day, in compliance with the agreement, which sees a combined output cut of 1.8 million barrels of oil every day by participating members.