KUWAIT: Oilministers from leading OPEC nations said yesterday they expect prices willarrest their recent slide and rebalance early next year, when a deal on newproduction cuts takes effect. Oil prices have shed more than 36 percent sinceearly October to trade at $54 per barrel, due to fears of oversupply and weakglobal demand. But president of OPEC and UAE Energy Minister Suhail Al-Mazroueisaid that the surplus in the oil market was small compared to 2017 and expectedit to vanish in one or two months.
"Based onavailable figures, we have around 26 million barrels of surplus ... compared to340 million barrels in early 2017," Mazrouei told a press conference inKuwait. "I think that we can easily do with this surplus and reach marketrebalance in one or two months... in the first quarter of next year," hesaid. OPEC - a cartel of producer countries that has long manipulated output ofthe commodity, to influence global prices in members' favor - and non-OPECmembers agreed in early December to trim production by 1.2 million barrels aday from Jan 1, in a bid to shore up sagging prices.
Mazrouei said oiloutput by OPEC producers will be cut by three percent, and two percent bynon-OPEC countries. He said that there has been higher than anticipated supplyon the market in recent months, as US sanctions on Iran have had a lesspronounced effect on the country's oil exports than had been expected. On USPresident Donald Trump's call on the producers to slash crude output, Mazroueisaid: "We solely consider the facts and market balance...we are committedto serve our states' interests."
Iraq's OilMinister Thamer Al-Ghadhban said that there is a consensus among OPEC andnon-OPEC producers to comply with the new agreement to trim output in a bid tostabilize the market. He said the new agreement is valid for six months and theministers will meet in April to assess the impact of the cuts. Ghadhban said hebelieves that the new measures taken by producers will "stop the slide inoil prices."
Ghadhban alsosaid that his country is expected to put its final touches on the agreement ofexporting gas to Kuwait. He said that the agreement was made during mandate ofthe previous Iraqi government, and "we will consider the agreement andmake our decision based on positive data". "I cannot say that I haveany remarks on the agreement because we have exported gas to Kuwait in the'80s, but we all know that Iraq has a big need for gas, especially in generatingelectric power," Ghadhban said. "The two sides negotiated severaldays ago on the borderlines between Kuwait and Iraq and studies have been madewith engineers and technicians to make the area beneficial for bothsides," he added.
Mazrouei said thatproducers are ready to renew the agreement or increase cuts in case the marketdoes not balance. "If the production cuts of 1.2 million barrels a day isnot enough, we will meet again to see what is enough and apply it," hesaid. During their meeting next April, the producers are also expected to signa long-term agreement to formalize cooperation between OPEC and non-OPECmembers over oil output. OPEC has lately been cooperating closely with Russiaand other non-cartel producers, in a bid to impose greater control over globaloutput and prices. - Agencies