The Organisation of Petroleum Exporting Countries (OPEC) has called on its member countries as well as non-OPEC countries led by the Russian Federation to conform fully to the oil production curb agreement they reached to rebalance the global oil market.
OPEC said conformity to the output cut deal it reached under the Declaration of Cooperation (DoC) with non-members was 168 per cent in April 2019, adding that average conformity reached 120 per cent since January 2019.
However, Saudi Arabia’s Minister of Energy, Industry, and Petroleum Resources, Khalid Al-Falih, said at the recently held 14th Joint Ministerial Monitoring Committee (JMMC) meeting of the group in Jeddah, that it was important for all signatories to the deal to fully conform.
Al-Falih added: “Our shared goal of market stability, which clearly benefits everyone including consumers, has made the Declaration of Cooperation credible, responsive, and highly effective.
“I would, however, sound a note of caution. We can’t allow our collective success to mask individual under-performance.
“Conformity should never be presumed and must be evenly distributed. My hope is that the vigorous participation of select countries, and its visible results, have shown the full potential of OPEC+ if everyone plays a full role. Cohesion and its practical demonstration are the true keys to success, be it conformity or more broadly acting in unison,” said Al-Falih.
The Saudi minister also hinted that OPEC and its allies would not be hasty in taking decisions about the DoC in their upcoming meeting. He said developments in the market were foggy and needed to be studies patiently.
“Putting this all together, while we want to make decisions and not shy away from them, it is critical that we don’t make hasty decisions – given the conflicting data, the complexity involved, and the evolving situation.
“That’s the reason we postponed the April OPEC+ meeting planned for Vienna to June and added this meeting so we could acquire some additional information.
“Taking a little more time and deciding at the June OPEC meeting will allow us to secure even more information to arrive at the best possible decisions. Again, keeping inventories under control will be on our critical path,” he explained.
According to him, OPEC and its allies would, “always done the right thing in the interests of both consumers and producers; and we will do it once again.”
Speaking further on the current situation of the market, Al-Falih stated: “To be frank, the picture is quite foggy, with the market defined by conflicting signals.
“Starting with the global economy, although multilateral institutions have moderated their forecasts of world growth, the levels are still reasonably healthy with the U.S. leading a steady performance while the Chinese economy started the year fairly strongly. But the growing trade dispute between the same two leading global economic powers is casting a shadow over the global economic outlook. This could also have a contagion effect on other nations, which could show in weakening oil demand.”
“Looking at the oil supply side of the equation, some signals point to tightening supplies, while others highlight the healthy pace of U.S. oil production.
“Similarly, on the demand side, there are numerous uncertainties. Some institutions are revising oil demand downward, yet other reports suggest that demand in non-OECD countries (led by China, Russian, and India) alone approached a million barrels per day year-on-year,” he added.