OPEC looking for consensus on decreasing oil glut

OPEC heavyweight Khalid al-Falih (center), Saudi Arabia’s oil minister, is working to ensure a consensus to extend the OPEC supply cut agreement beyond June.  Twitter photo.

OPEC meeting in May to discuss extending supply cut pact

OPEC Secretary General Mohammad Barkindo says influential members of the cartel, including Saudi Arabia, are working to ensure an agreement to extend the supply cut pact is reached when the group meets in Vienna late next month.

Originally, the Organization of Petroleum Exporting Countries along with Russia and some other non-members agreed to curb crude production by a total of 1.8 million b/d for the first six months of this year.

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The deal helped boost oil prices, but the global supply glut has been slow to shift.  Now, Saudi Arabia, the cartel’s top exporter and other OPEC member nations are signalling they support extending the deal at the May 25 meeting.

Speaking at a conference in Paris, Barkindo said “While it is evident that the market rebalancing is now moving forward and investment specifically in short-cycle projects is returning, it is essential we do not take our eyes off our desired goals.”  He added “We need to see the global stock overhang move closer to its five-year average.”

Barkindo said Saudi Energy Minister and OPEC 2017 president, Khalid al-Falih is working to get a consensus on extending the supply cut pact before OPEC ministers meet next month.

“We are confident that the collaborative effort of Minister Khalid al-Falih and other ministers … will eventually facilitate a successful conclusion of the meeting in Vienna on the 25th,” Barkindo said.

Reuters reports Falih along with energy ministers from Azerbaijan, Iraq and Angola have agreed to continue the production cut.  Iraq’s Oil Minister Jabar al-Luaibi said the production cuts were gradually tackling the supply glut and he said Baghdad would go along with an deal to extend the pact.

Angola’s oil minister José Maria Botelho de Vasconcelos said he believes the deal will be extended to the end of 2017.

According to the Reuters report, Amin Nasser, chief executive of Saudi Aramco said “The market is moving towards rebalancing.” He added “I see the oil market pointing upward and expect it to continue improving.”

The International Energy Agency’s latest report shows that oil stocks in industrialized nations were about 3.06 billion barrels at the end of February.  The IEA says that is approximately 336 million barrels above the five-year average.