- OPEC June Meeting to Review Oil Production Cut Deal
Organisation of Petroleum Exporting Countries (OPEC’s) next meeting in June will be a chance to review its oil production cut agreement, but the group, according to Kuwait’s Oil Minister Bakheet al-Rashidi, will continue with cuts through 2018.
While it will be discussed in June, a decision on whether to extend the deal into 2019, will be taken later this year, Rashidi told newsmen on the sidelines of the Kuwait Oil and Gas Summit.
OPEC, with 10 non-OPEC allies, led by Russia, are in the midst of 1.8 million barrels per day (b/d) production cut agreement aimed at drawing down crude oil inventory levels and creating market stability, so that upstream investment can occur to meet the projected increases in demand.
Saudi Arabia and Russia are leading discussions on extending the OPEC/non-OPEC coalition’s alliance.
OPEC Secretary-General, Mohammed Barkindo, who spoke at the same event, added that Organisation for Economic Cooperation and Development (OECD) commercial crude oil inventories had fallen to less than 50 million barrels over the five-year average, compared to about 340 million barrels in 2014. This trend, he said, is expected to continue in the coming months.
Oman’s Oil Minister, Mohammed al-Rumhy, who signed the cuts as a non-OPEC producer, warned that the group should not consider its job done yet. “We have not reached the steady state conditions yet and the game is not over. The uncertainty monkey is still on our shoulder and it’s not the time to offload that,” he said at the same conference.
Oil rose on Tuesday, boosted by investors’ growing concern over the potential for disruptions to crude supply, especially in the Middle East. Brent crude oil futures were up by 10 cents at $71.52 a barrel, while United States (US) crude futures gained 9 cents to be $66.31 a barrel.
Traders said oil markets were receiving general support due to the risk of supply interruptions, including a potentially spreading conflict in the Middle East, renewed US sanctions against Iran and falling output in crisis-hit Venezuela.
“With so many potential supply disruptors in play and few signs that the current market upheaval will end any time soon, traders continue to pay the geopolitical risk premium,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.