OPEC Pays Attention to Market Stability
US President Donald Trump's criticism of OPEC and his call for the OPEC to reduce oil prices made the 174th ministerial meeting of the Organization of the Petroleum Exporting Countries a very sensitive one. During the meeting, OPEC had to choose between serving OPEC interests and pleasing Trump.
But the OPEC final statement made it clear that the Organization finally stuck with the October 2016 decision to cut production quotas.
Russian Minister of Energy Alexander Novak said after the end of the joint ministerial meeting of OPEC and non-OPEC producers that 1 billion barrels of oil had been cut from oil stocks.
"It can be easily imagined where the market would have been at the moment, in case we had not taken the 2016 action," said Novak.
He also referred to a similar decision made by non-OPEC countries in following the ministerial committee, saying: "That shows this group of countries have reached consensus and they can make decisions which the market needs."
After the 174th ministerial meeting, some media in Vienna said OPEC had agreed to lift output in a bid to calm down prices.
But Saudi Minister of Energy Khalid al-Falih said some of countries involved in the OPEC-non-OPEC agreement would increase their production to reach quota levels, which did not mean supply was overtaking demand.
Noting that the main objective was not to lift prices, but to stabilize market, he said arrangements were being made to avert the 2014 oversupply which harmed investors and producers.
Falih has warned that the world could face a supply deficit of up to 1.8 mb/d in the second half of 2018 and that OPEC's responsibility was to address consumers' worries.
"We want to prevent the shortage and the squeeze that we witnessed in 2007-2008," Falih said, referring to a time when oil rallied close to $150 per barrel.
United Arab Emirates Energy Minister Suhail bin Mohammed al-Mazroui said: "As a group we can meet the 100 percent compliance. As individual countries, it is challenging."
Al-Mazrouei said that OPEC had made “the best choice” in balancing the interests of its members and other producers.
“How is it allocated? I think that is not yet decided due to the fact that there are discrepancies between certain countries. It would not make sense if we allocated production to a country that cannot produce the relevant amount, so we avoided having allocations from that perspective,” he said.
Iraqi Oil Minister Jabar Ali al-Luaibi said the new agreement would positively affect the market.
He said Iraq would comply with OPEC decisions, adding that his country would stick to its oil production and exports level as of July 1.