Oil-producing nations are moving closer toward ending a global glut and re-balancing the crude market, and OPEC will decide next month whether to extend its cuts in output beyond June, the group’s Secretary-General Mohammad Barkindo said.
The Organization of Petroleum Exporting Countries and other major producers are committed to reducing oil stockpiles, and all countries participating in a six-month deal to pare output are committed to restoring the market’s stability, Barkindo said at a conference in Abu Dhabi. OPEC will decide at its meeting on May 25 whether to prolong the cuts it began making in January, he said.
“We are optimistic the policy measures have already placed us on the path of recovery,” Barkindo said in a speech. “Our collective action will continue to prove effective.”
OPEC and several other producers including Russia agreed in December to pump less oil in an orchestrated effort to end an oversupply weighing on prices. Compliance with the cuts was more robust in March compared to the previous month, Barkindo said. Benchmark Brent crude has gained about 19 percent since the agreement, which took effect in January, and was 17 cents higher at $55.06 a barrel at 10:22 a.m. in London.
It would be premature to talk about the possible participation of OPEC members Iran, Nigeria and Libya in any extension of output limits, Barkindo said in an interview with Bloomberg Television. OPEC exempted Nigeria and Libya last year from cutting production, due to their internal conflicts, while it agreed to let Iran pump an additional 90,000 barrels a day to reach output of about 3.8 million.
OPEC’s compliance with the cuts improved to 104 percent in March from 90 percent in February, while the rate for non-OPEC producers in the deal increased to 64 percent from 38 percent over the same two months, the International Energy Agency said in an April 13 report. OPEC’s average compliance for 2017 is 99 percent, it said.