More OPEC Members Call For Cuts Extension Beyond June

Date:

Venezuela, Iraq, Oman oil ministers support extension
Producers meet in Kuwait City to review compliance with cuts

Thank you for reading this post, don't forget to subscribe!

Venezuela, Oman and Iraq added their support for a possible extension of global oil-production cuts beyond June as momentum built among OPEC members and other crude producers to prolong the strategy to re-balance the market and prop up prices.

Oil minsters for the three countries commented on Sunday, a day after Algeria’s Energy Minister Noureddine Boutarfa called for an extension because he said the strategy is succeeding in reducing global inventories. The ministers are meeting in Kuwait City to discuss compliance with the reductions.

“We are ready to support” an extension on the six-month deal, which took effect in January, Venezuela’s Oil Minister Nelson Martinez told reporters on Sunday before the meeting. “It does make sense to extend the agreement for another six months — maybe at least,” said his Omani counterpart, Mohammed Al Rumhy. Oman, unlike Venezuela, isn’t a member of the Organization of Petroleum Exporting Countries.

Russia is moving ahead with its own reductions to curb a glut. “It’s important to accomplish last year’s deal first,” Russia’s Energy Minister Alexander Novak said before the meeting. Russia will target its pledged reduction of 300,000 barrels a day by the end of April, he said.

Kuwait this month became the first nation to call for extending the production cuts, with Oil Minister Issam Almarzooq saying inventories had grown more than expected. OPEC and 11 other major producers including Russia agreed last year to slash production, spurring a 20 percent increase in Brent crude prices during the last five weeks of 2016. The rally stalled this year as U.S. output and supplies continued to grow. OPEC ministers will meet May 25 in Vienna to decide whether to extend the deal.

Brent crude futures closed on Friday at $50.80 a barrel in London, down 96 cents, or 1.9 percent, for the week. The benchmark grade has dropped 11 percent this year and reached a low for this year of $49.71 a barrel on March 22.

The joint ministerial monitoring committee, comprising three OPEC members and two producers outside the group, will discuss the possibility of prolonging the cuts beyond June, Novak said. With U.S. crude stockpiles swelling to record levels and prices sinking below $50 a barrel, OPEC and its partners have little choice but to keep going, according to all 13 analysts surveyed by Bloomberg.
High Inventories

Oil inventories are high because of low U.S. demand and higher supply, and the market should re-balance in the second half of the year, OPEC Secretary-General Mohammad Barkindo told reporters in Kuwait. It’s too early to decide on an extension of the output cuts, and OPEC will take up that issue at its May meeting.

Iraq, OPEC’s second-biggest producer after Saudi Arabia, will support extending the cuts if other members of the group also agree to do so, Oil Minister Jabbar Al-Luaibi told reporters. Iraq has reduced output and exports by 187,000 barrels a day under the accord, and its cuts will reach the promised level of 210,000 in a few more days, he said. The country has pumped 4.312 million barrels a day in March, down from 4.35 million in February, Al-Luaibi said.

The combined compliance rate for OPEC and non-OPEC producers was 94 percent of the end of February, Russia’s Novak said. Non-OPEC nations, including Russia, have reached compliance of 64 percent, Kuwait Oil Minister Almarzooq said Saturday.

Iraq has made “good efforts,” even if independent analysts disagree on how much it has cut, Algeria’s Boutarfa said in a Bloomberg Television interview. Boutarfa asked for the cuts to be extended for three or four months. A “clear impact” of the deal, including on U.S. stockpiles, will be visible in the next few weeks, Boutarfa said in a video Saturday on the Algerian energy ministry’s Facebook page.
Angola, another OPEC member, previously signaled a willingness to back the decreases in output beyond the first half of this year. Khalid Al-Falih, the energy minister of the group’s biggest producer, Saudi Arabia, signaled in a Bloomberg Television interview on March 17 that the kingdom has grown more willing to extend the curbs. The deal will be maintained if oil stockpiles are still above their five-year average, he said, shifting from his previous position that six months of cuts would be enough.

Russia has reduced production by 185,000 barrels a day from the October level, Novak said. If it reaches its target of cutting 300,000 barrels a day, Russia’s production would be lowered to 10.947 million barrels a day — accomplished by the end of April — from 11.247 million barrels a day in October, according to Russia’s Energy Ministry.

Naija247news
Naija247newshttps://www.naija247news.com/
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

Share post:

Subscribe

Popular

More like this
Related

FAAC Reports Surge in Distributable Revenue to N2.07 Trillion in February 2024

Against the backdrop of subsidy removal and the liberalization...

Minister of Power Decries Revenue Loss from Attacks on Electricity Facilities

The Minister of Power, Adebayo Adelabu, has expressed concern...

CBN Discloses DISCOs’ N273.34 Billion Credit Facility for Meter Purchase

The Central Bank of Nigeria (CBN) has revealed that...

Soldiers Massacre: “Defense Headquarters Reveals Identities of Fallen heroes in Okuoma Community Attack”

The Defense Headquarters has revealed the identities of the...

Discover more from Naija247news

Subscribe now to keep reading and get access to the full archive.

Continue reading