Monday 17 / March / 2025
Muscat: The deal 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, which oversees implementation of the global deal. The meeting, taking place in Oman for the first time, will not discuss an exit strategy from the supply cuts, the minister added.
The Organisation of Petroleum Exporting Countries (Opec) and non-Opec producers led by Russia in last November agreed to extend oil output cuts until the end of 2018 as they try to finish clearing a global glut of crude oil. The producers’ current deal is for cutting 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 output).
The current oil price level is healthy for investment in the oil industry and for the global economy, Rumhi added, saying there was concern about a lack of investment in the industry. Brent crude is just below $70 a barrel, while Oman Crude (January delivery) is traded at $66.04 per barrel.
Dr. Al Rumhy also said that global oil producers were due to discuss in November this year whether to renew their cooperation agreement on supply cuts or enter a new type of agreement. Oman is in favour of reaching a new type of deal, he said.
Global supply cut
Global oil suppliers will consider whether to extend their cooperation beyond 2018, but such cooperation would not necessarily mean extending current output levels, added 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," Falih told reporters on the sidelines of a 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 said. Al Mazroui added that Opec is not underestimating supply from any oil producer.
He expects a rebound of shale oil supply and that Opec producers were not underestimating its impact.
Speaking to reporters on the sidelines of the meeting, Al Mazroui also said he expected compliance levels in December with the agreement to be good.
Agreeing with the UAE minister, Russian Energy Minister Alexander Novak said that oil producing countries are determined to take this output cut agreement to the end.
— With inputs from Reuters
