OPEC, allies job is not done yet - Mr al-Mazroui

Andrew Cummings
February 22, 2018

Suhail al-Mazroui, who holds OPEC´s presidency this year, said leaders of the UAE, OPEC´s biggest producer Saudi Arabia and non-OPEC member Russian Federation support extending energy cooperation beyond 2018.The Organization of the Petroleum Exporting Countries has agreed to extend oil supply cuts with Russian Federation and other producers until the end of 2018.Mazroui said that he hoped a plan could be put to ministers at OPEC´s next meeting in June in Vienna, which non-OPEC producers participating in the supply-reduction agreement are expected to attend. "It was also a period that saw major stock builds, with the OECD stock overhang increasing to a level of 380 million barrels above the five-year average at the end of July 2016", he said.

Speaking at an energy conference in London, Mazrouei, who holds the OPEC presidency this year, said the exporting group was not targeting a specific oil price but rather seeking a balanced oil market.

Last month, Khalid al-Falih, energy minister of Saudi Arabia, OPEC´s de-facto leader, said global oil producers are in agreement that they should continue cooperating on production after their deal on supply cuts expires at the end of this year.

There were three key points that were discussed on a wide-scope among a great number of analysts and traders, which are the Saudi plans to import liquefied natural gas, the future of OPEC agreement with exterior producers and the shale oil and its solidity and continuity, especially that it is expected to increase remarkably this year.

There are also roughly a dozen other non-OPEC nations that have pledged to cut 600,000 additional barrels per day, with Russian Federation making half of these additional reductions.

To date, OPEC has delivered more than 100 percent of the output cuts that members pledged under the original deal.

The US is going to keep pumping it, a top Trump administration official said today.

This average, however, is higher this year compared to last year because it includes more years in which stocks were in oversupply.

'The majority of this rising demand will come from developing countries, increasing by nearly 24 mb/d, to reach 67 mb/d by 2040.

The official comments from both Saudi Arabia and Russian Federation are that it's too early for an exit strategy, except the common-sense assumption that the exit should be gradual to avoid an oil price slump.

While OPEC and friends have managed to almost erase the oil glut, they now face another tough discussion: when and how to start exiting the cuts.

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