Energy Mjnister says about 158 million barrels in surplus oil inventories still need to be cleared
OPEC needs to extend limits on oil output to help rein in the remaining excess in global supply, but isn’t considering making deeper cuts, the United Arab Emirates energy minister said.
The group is talking about prolonging production curbs when its members meet at the end of the month and won’t discuss any increase in the size of the cuts, Energy Minister Suhail Al Mazrouei said Monday in Abu Dhabi.
About 158 million barrels in surplus oil inventories still need to be cleared, he told reporters.
“The agreement aims at clearing this glut and bringing market back to balance,” Mazrouei said. “Judging from the current situation, I see a need for extending the agreement,” he said, without suggesting a length for an extension.
Mazrouei’s comment echoes a view that other important members of the Organisation of Petroleum Exporting Countries have expressed in recent days about the curbs, which took effect in January and will expire in March. Saudi Arabia’s Energy Minister Khalid Al-Falih said Friday that OPEC and allied producers including Russia should announce an extension of their output limits when they gather on Nov 30 in Vienna.
Iran’s Oil Minister Bijan Namdar Zanganeh said most members of OPEC favor an extension, the state-run Islamic Republic News Agency reported Monday. Zanganeh didn’t specify which members support prolonging the curbs.
OPEC has yet to persuade Russia, the world’s biggest energy exporter, that it’s necessary to agree this month to extend the limits. Officials and oil executives in Moscow still haven’t decided how long the production deal should last, and Russia thinks it’s too early to announce anything this month, according to two people with knowledge of the matter.
Oman, a member of the producer committee monitoring the cuts, wants to prolong them beyond March and sees suppliers keeping them until the end of 2018, Oil Minister Mohammed Al Rumhy told reporters on Nov 13.
The UAE’s Mazrouei said he’s optimistic about an agreement to extend the cuts and that he doesn’t think it will be hard to reach a deal.
“It’s logical to extend - everyone is gaining,” he said.
Benchmark Brent crude has risen 10 percent this year.
“Current oil prices are logical, given the state of supply and demand at the moment,” Mazrouei said. “Global demand this year is healthy and exceeded expectations, and we expect it to continue to grow next year.”