The UAE is optimistic about a possible extension of a global oil production cut beyond March 2018, to be discussed at the next Opec meeting taking place in Vienna on November 30, the country’s oil minister said on Monday.
“We in the UAE feel that there’s a potential for an extension. For how long? this is something we will discuss.” said Suhail Al Mazroui. “And the market has recovered. Demand has been better than expected.”
Mr Al Mazroui said there are around 158 million barrels of global inventory above the five-year average, and the market needs time to remove this oversupply. He was speaking on the sidelines of Abu Dhabi International Petroleum Exhibition and Conference (Adipec), which runs until Thursday.
To reduce inventories to their five-year average, Opec and a group of countries led by Russia are trimming 1.8 million barrels per day (bpd) as part of an agreement struck last year to help shore up dwindling oil prices. The oil pact helped push Brent prices to over US$60 a barrel at the end of October for the first time in over two years.
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Mohammed Barkindo, the secretary general of Opec, said the oil industry is benefiting from the deal to cut output, which has helped reduce oil inventories.
“Today we’re confident that the oil industry and the global economy are clearly benefiting from the noble efforts of this unprecedented joint decision of the 24 Opec and non-Opec participating producers in the declaration of co-operation, we have seen clear indication that the market is accelerating,” said Mr Barkindo.
“If we hadn’t done what we did last year, mobilising as we did, and jointly taken action in responding to the crisis, the industry would probably be in a different condition today.”
The decline in Opec production, however, is being offset by an increase in shale oil output.
Shale production will grow faster than expected over the next four years, Opec has forecast, as North American producers take advantage of the rebound in oil prices.
US shale production will climb to 7.5 million bpd in 2021, which is 56 per cent higher than last year’s forecast, Opec said in its World Oil Outlook report, which it published last week.