The Joint OPEC-Non-OPEC Ministerial Committee on Monitoring Compliance with Oil Output Cuts Agreement Holds its 4th Meeting
The Joint OPEC-Non-OPEC Ministerial Committee on Monitoring Compliance with the Oil Output Cuts Agreement held its 4th meeting co-chaired by Alexander Novak, Minister of Energy of the Russian Federation, and Khalid al-Falih, Minister of Energy, Industry and Mineral Resources of Saudi Arabia; Essam al-Marzouq, Kuwait’s Oil Minister, and Mohammed Barkindo, OPEC Secretary General, also participated in the meeting.
The Ministerial Committee considered the report by the Joint OPEC-Non-OPEC Technical Committee (JTC) and noted that the oil market was steadily progressing toward re-equilibrium. Experts believe that the global oil market is continuing to stabilise: over recent weeks, the market has become less volatile and there has been a markedly greater influx of investments into the oil industry.
The JTC’s report notes that the demand for oil is expected to rise significantly in July–December 2017 compared to January–June and will reach 2 million bpd; it will help reduce crude oil stocks. In addition, in June 2017, the OPEC–non-OPEC oil-producing countries party to the agreement demonstrated 98% compliance with their obligations to cut oil production. Such a high compliance level was achieved in January–June 2017. In that period, the oil-producing countries cut their output by approximately 351 million barrels. Moreover, the OECD countries’ crude oil stocks in excess of the 5-year average dropped by 90 million barrels and currently total 250 million barrels.
The Ministerial Committee noted that, despite the generally high level of compliance, certain countries could have demonstrated better results and formulated its stance demanding that all the parties promptly achieve 100% compliance with the plan. Following the meeting, the Ministerial Committee held separate consultations with the lagging countries; the Committee will continue to discuss compliance with each party separately, particularly with those that are yet to achieve full compliance before the Declaration on Cooperation expires.
The Committee also recommended that the Declaration on Cooperation be extended beyond the first quarter of 2018, should further measures to stabilize the market be required.
Following the meeting, the head of Russia’s Ministry of Energy emphasized that it was the first meeting the Monitoring Committee had held in Russia.
“Today, we have discussed the current state of the market and monitoring of compliance with the agreement. On the whole, we hold a favourable view of the situation. We have achieved a very high, historically unprecedented compliance rate. Since the start of the month, we have seen dropping stocks and a high potential for a further reduction in them in the third quarter, since demand will increase”, Alexander Novak said.
Russia’s Minister emphasized that the parties had discussed in detail the output increase in Libya and Nigeria. “The situation in Libya and Nigeria is fairly volatile. We will continue to monitor output in those countries”, Alexander Novak said.
The head of Russia’s Ministry of Energy added that Russia did not object to the JTC tracking oil exports while monitoring compliance with the output cut agreement but, in this situation, oil product exports should also be taken into account.
Russia’s Minister of Energy stressed that, despite the high compliance rate, the Committee has decided that all countries should be in full, 100% compliance with the declaration. “Russia is fully compliant with the obligations undertaken with respect to oil output cuts. Oil production in Russia has been cut by over 300,000 barrels compared to October 2016. We will continue to comply with the agreements achieved. The end result of efforts to stabilize the oil market is cutting oil stocks to the 5-year average”, Russia’s Minister of Energy explained.
Alexander Novak added that the situation on the global oil market would be discussed at the first “Russian Energy Week” International Forum attended by leading experts. The Forum will be held in Moscow on October 3–7, 2017.
Source: https://minenergo.gov.ru/
