ABU DHABI: Opec (Organisation of the Petroleum Exporting Countries) is committed to its output cut agreement and will continue the deal for the rest of the year, Minister of Energy Suhail Al Mazroui said on Thursday, adding that that the market is balancing but still has some room for improvement.
“We are continuing to see market correction, as we move into 2018 and we will see more correction happening. We still have 100 million (barrels of oil) that needs to be removed,” Al Mazroui said while speaking at The Gulf Intelligence UAE Energy Forum in Abu Dhabi.
Crude oil is at a three-year high, with Brent trading above $69 per barrel and West Texas Intermediate at $64 per barrel on Thursday as Opec and non-Opec members cut production by about 1.8 million barrels per day to support oil prices.
Growing tensions in the Middle East as well as drawdown in global oil inventories is also helping oil prices to move up.
Mazroui, who is also the Opec president for 2018, said they will continue to implement the production cut agreement until the end of the year to remove oversupply from the market and support oil prices.
“Opec is committed to what they have decided in the meeting in November and will continue the deal for the year. Everyone is benefiting from the agreement and we should not doubt the commitment,” Al Mazroui said.
On compliance, he said the group is over delivering in certain months with compliance levels reaching 122 per cent in November.
Asked whether they are considering ending the deal abruptly due to concerns on market overheating, Al Mazroui said there is no such possibility.
“The oil price is still $60 in terms of average. I don’t think we are panicking and seeing any need to do something out of the norm of supply and demand equation. We still need to remove oversupply from the market and we are still committed to the deal.”
Speaking on shale oil production in the US, he said the US market has been supportive of the industry and growth of shale oil is something that could come to rescue at some time.
“The only issue is the pace of production and we need to adhere to supply and demand factor,” he said without elaborating further.
He also said Opec as a group is playing a key role in the stability of the market and they are receiving good support from other countries.
“This group is not a cartel. It is intended to help the industry and to ensure that the demand is going to be met with adequate supply in future.
“There was a time when the strength of Opec in correcting the market was weak but we made the deal and proved to the world how strong the group is. The support to the group is growing and we have seen 30 countries attending the meeting in November,” Al Mazroui said.