OPEC and allied oil producers should extend their production cuts beyond March to help re-balance the market, the UAE said, adding weight to a gathering consensus for longer reductions in output among participants in the global accord.
The UAE favours maintaining the cuts, which are set to expire at the end of the first quarter, Minister of Energy Suhail Al Mazrouei said.
The fourth-largest member of the Organization of Petroleum Exporting Countries staked out its position a day after OPEC Secretary-General Mohammad Barkindo said that caps on output are the “only viable option” to restore stability to the market.
“Definitely there’s a need for extension,” Mazrouei said Tuesday at an energy conference in Abu Dhabi.
Output cuts by OPEC and other producers such as Russia and Oman have started to pay off, with benchmark Brent crude trading close to a two-year high. OPEC will meet in Vienna on Nov. 30 to review the pact on cuts, which took effect in January, and possibly extend it. Russia, Saudi Arabia and Iraq already signalled they would be open to extending the curbs.
Oman, a member of the producer committee monitoring the output cuts, wants to prolong them beyond March and sees producers extending the limits until the end of 2018, Oil Minister Mohammed Al Rumhy told reporters on Monday in Abu Dhabi. The largest Arab oil producer outside of OPEC doesn’t want to delay a decision to extend the cuts and supports a Saudi proposal to prolong them at the producers’ meeting this month, he said.
Mazrouei said on Monday that coordinated cuts by OPEC and suppliers outside the group have helped trim crude inventories from record storage levels, “I am optimistic about the whole of 2018,” which will be a “recovery year” for oil markets, he said.
Brent has gained 10 percent this year and was trading 70 cents lower at $62.46 a barrel in London at 3:21 p.m. local time.
“We are seeing clear indications that the market is re-balancing at an accelerating pace and stability is steadily returning,” OPEC’s Barkindo said Monday. “I am certain that if we had not mobilised ourselves when we did, building consensus and jointly taking action in responding to the crisis, the industry would be in worse condition than it is today.”
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