Oil rises on hints of extension of output cuts
Ejiofor Alike with agency reports
The Secretary General of Organisation of Petroleum Exporting Countries (OPEC), Mr. Mohammad Sanusi Barkindo, has written to the Secretary of Energy of the United States, Rick Perry, conveying his condolences for the tragic loss of lives in the wake of Hurricane Harvey and assuring the US that the cartel is committed to market stability in the oil market and would mitigate any current or future supply disruptions.
This is coming as crude oil prices rose wednesday over hints that OPEC and non-OPEC members could extend the oil production cut deal when it expires in March 2018..
In the letter dated September 5, 2017, Barkindo also expressed OPECâ€™s solidarity with the people and government of the US during these trying times, particularly those in the flood afflicted areas of Louisiana and Texas.
â€œ May I extend my deepest condolences to all those who have lost loved ones or been injured in this natural catastrophe of unfathomable proportions. OPEC will continue its ongoing efforts to ensure much needed stability in the oil market, to contribute to mitigating any disruption to current or future supply,â€ Barkindo wrote.
Barkindo noted that Hurricane Harvey came after two years of contraction in the oil market and lagging investment in the oil industry, which he described as a great concern to all stakeholders.
According to him, OPEC is committed to working together with others for the stability and security of the oil market, which is so important for sustained economic growth and the advancement of global prosperity.
In a related development, crude oil prices rose yesterday following reports that Russia and Saudi Arabia are considering extending the oil production cut deal agreed between both OPEC and non-OPEC members once it expires in March 2018.
Global benchmark crude, Brent, was trading 0.29 per cent higher at $52.50 per barrel, while West Texas Intermediate was over one per cent higher at $47.79. Since the original agreement was announced last November, Brent has gained around six per cent while WTI has moved 13 per cent higher.
Russiaâ€™s Energy Minister, Alexander Novak, who is a key architect of the output cut deal that was extended by nine months last May, was quoted by the domestic news agency (Tass) as saying yesterday that representatives from the two countries had talked about an extension but that no specific decisions had yet been reached.
CNBC reported that Novakâ€™s comments followed similar remarks attributed to Iranian Oil Minister, Bijan Zanganeh, last Monday night that participantsâ€™ compliance with the terms of the deal had been improving.
â€œI think the oil market is balanced. OPEC membersâ€™ compliance with output cuts have not fallen in the last six months; it has increased,â€ Zanganeh was quoted by Reuters as saying via the Iranian oil ministryâ€™s news agency SHANA.
The minister was also reported to have added that unofficial talks between deal participants are currently underway.
Libya and Nigeria, the two OPEC members exempt from the current oil production cut deal, have been invited to participate in the producer groupâ€™s latest ministerial committee meeting September 22.
The two countries have been asked to attend the meeting in Vienna, Austria, to identify the latest developments in their oil sectors, Kuwaitâ€™s OPEC Governor, Haitham al-Ghais, had told Al-Rai newspaper last Sunday.
The OPEC and non-OPEC deal has so far led to a pullback of around 1.2 million barrels per day (bpd) of production generated by OPEC members and around an additional half of that figure again by non-OPEC participants.
However, compliance has been weakening according to monitors at the International Energy Agency (IEA), who claimed that OPEC membersâ€™ levels of compliance slipped to their poorest in six months in June as several countries elected to produce beyond the agreed limits.