Opec will look at options of extending oil deal at November meeting
UAE adheres to oil deal and expects market improvement, energy minister says
The UAE is in full compliance with a global oil output cut and expects further improvements in the oil market this year and in 2018 as Opec mulls extending its deal beyond March next year, the energy minister said on Monday.
The UAE is adhering to the oil deal, announcing export cuts every month, said Suhail Al Mazrouei in Abu Dhabi.
“The past two months, we’ve cut up to 10 per cent of our exports. I don’t think anyone else is that transparent and the UAE will remain committed to what we say,” the minister said.
Opec and a group of producers led by Russia agreed this year to extend a six month agreement to collectively cut production by 1.8 million barrels of oil per day (bpd) into the end of the first quarter of next year to help prop up oil prices. Opec members Libya and Nigeria were excluded from the deal due to conflicts and events that have disrupted their production.
The average price of Brent crude, the international benchmark, for the year has increased around 15 per cent to US$52.3 a barrel compared to last year’s average as world demand picks up and the oil output deal helps curtail the oil glut.
“We’re expecting the second half (of the year) to see improvements (in the oil price), and we’re witnessing those improvements as we speak,” said the minister.
By next year crude inventories should decline to below their five-year average, he said, Bloomberg reported.
Opec will meet in Vienna at the end of November to discuss the possibility of extending production cuts beyond March next year as well as inviting other non-Opec members.
“Once we meet, we’ll hopefully decide what we need to do post-first quarter [of next year],” Mr Al Mazrouei said.
Compliance from member countries has been seen as murky with a lack of transparency.
Iraq maintained that despite its extenuating circumstances, such as fighting the ISIL, that it is not only in full compliance, but has exceeded its share of 210,000 bpd oil output cut. “Eighty-seven per cent of our exports are being monitored. As the oil ministry, we have clear instructions from the prime minister that we should follow Opec,” Mr Jabar AlLuaibi said last week in Fujairah.
Opec is aiming to get prices back to $60 a barrel. However, the United States and Canada are sitting in a position to increase output in the wake of declining production costs.
The Institute of International Finance (IIF), a Washington DC-based association of the financial industry, said that futures market suggest an average price of $55 per barrel next year. “These forecasts reflect expectations of continued production increase in US shale oil and from Canadian tar sand, following productivity gains, and further recovery in production in Libya and Nigeria,” IIF said.
Opec’s production is expected to increase by an average of 700,000 bpd compared to last year, while non-Opec members led by the US, Canada and Brazil look to bring an additional 800,000 bpd of production to a market that is already over-supplied.
“We expect non-Opec main oil producers to continue to play important roles in keeping the market well supplied, leaving Opec production in the range of 33 to 34 million bpd and prices only gradually rising, but remaining below $60 a barrel by 2020," said the IIF.