Wednesday 24 / April / 2024
Muscat: The agreement on supply cuts among global oil producers aims to address excess oil inventories, which are still high, rather than price levels, Dr Mohammed bin Hamad Al Rumhy, Minister of Oil and Gas, said here on Sunday.
He was speaking to reporters on the sidelines of a meeting of the joint ministerial committee that oversees implementation of the global output agreement. The meeting will not include discussions about an exit strategy from the supply cuts, he emphasised.
The Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC producers led by Russia, agreed last November to extend oil output cuts until the end of 2018, as they strive to clear a global glut of oil.
The producers’ current agreement is for reducing about 1.8 million barrels per day (bpd) in an effort to boost oil prices.
As part of the deal, the Sultanate has been cutting 45,000 barrels of crude oil production per day (or roughly 5 per cent of the output). The current oil price level is healthy for investment in the oil industry and for the global economy, Dr Al Rumhy added.
There are concerns about a lack of investment in the industry, he noted. Brent crude is just below $70 a barrel, while Oman Crude (January delivery) is trading at $66.04 per barrel.
Al Rumhy said that global oil producers will meet in November this year to discuss whether to renew their cooperation agreement on supply cuts, or enter into a new type of agreement. Oman is in favour of reaching a new type of deal, he pointed out.
Global oil suppliers will consider whether to extend their cooperation beyond 2018, but such cooperation would not necessarily mean extending current output levels, stressed Saudi Arabian Energy Minister Khalid Al Falih. “We should not limit our efforts to 2018 - we need to be talking about a longer framework of cooperation,” Al Falih told reporters during the ongoing meeting of the joint ministerial committee. “I am talking about extending the framework that we started, which is the declaration of cooperation beyond 2018. This doesn’t necessarily mean sticking barrel by barrel to the same limits or cuts, or production targets country by country that we signed up to in 2016, but assuring stakeholders, investors, consumers and the global community that this is something that is here to stay. And we are going to work together.”
The United Arab Emirates will comply 100 per cent with the oil supply
cut agreement, its Energy Minister, Suhail Al Mazroui, stated. He added OPEC is not underestimating supplies from any oil producer.
He expects a rebound of shale oil supplies and that OPEC producers are not underestimating its impact. Speaking to reporters, Al Mazroui also pointed out that the expected compliance levels with the agreement should be good in December.
Agreeing with the UAE minister, Russian Energy Minister Alexander
Novak stressed that oil producing countries were determined to see this output cut agreement to the end. – With input from Reuters
