The leading oil producers in the Persian Gulf, Saudi Arabia and Kuwait, gave clear signal that the Organization of Petroleum Exporting Countries (OPEC) is planning to extend the agreement on the contraction of yields.
“There is a consensus among oil makers that the deal should be extended beyond its original six-month deadline, but there is still no deal”, said the Saudi Arabian Energy Minister, Khalid Al-Falih. Asked about the position of Russia, which is not a member of OPEC, Falih said, “We are talking to all countries. We have not reached a secure agreement, but the consensus is growing”.
Kuwait’s oil minister, Essam al-Marzouq, commented at the same event that he expects the agreement to be extended. “Russia is with us according to preliminary information. Russia’s compliance with the agreement is very good. All will continue at the same level”, he added. “If OPEC and non-cartel makers decide to extend their six-month deal, the cuts may not be as profound as more demand is expected in the second half of 2017”, said also Marzouq. In his words, one African country has asked to join the deal but has not indicated which country it is talking about.
OPEC has a meeting on May 25, which will discuss an extension of the agreement by which the cartel and countries outside will reduce yields by 1.8 million barrels per day.
According to Khalid Al-Falih, there is a “prior agreement” that cuts will probably have to continue to shrink high global reserves. “Our target is the reserves. This is the main indicator of the success of the initiative”, added Saudi Arabian Energy Minister. Although some stocks in tankers at sea or in producer countries are declining, they remain particularly high in regions that primarily consume oil, especially Asia and the United States.
Last week, the International Energy Agency announced that oil reserves in industrialized countries are still 10% above the 5-year average.
Oman’s oil and gas minister Mohammed bin Hamad Al Rumhi said a fairly high number of producer countries supported the prolongation of the deal to reduce the yield.
Iraq, however, is likely to seek an exception to increase its yield, said the leader of the Islamic Supreme Council of Iraq, Ammar al-Hakim.