Kuwait’s oil minister Bakhit al-Rashidi said on Wednesday there is no plan or intention so far to exit from a production-cutting agreement among OPEC and non-OPEC oil producers.
“The production-reduction agreement will remain for a long time and there is no thinking right now to exit it,” Rashidi told a news conference in Kuwait City with OPEC Secretary General Mohammad Barkindo.
The Minister said the upcoming committee meeting of some OPEC and non-OPEC ministers in Oman would focus on reviewing adherence to the cuts, adding that compliance in December was at 125 percent, while in November it was 122 percent, the highest since the deal started in January 2017.
“This is evident by the 106 percent total compliance rate showed by OPEC and non-OPEC members to the agreement in 2017,” Rashidi stated.
Devising an exit strategy for the Joint Ministerial Monitoring Committee (JMMC) members in the future will not be discussed during Muscat’s meeting, as they continue to show full commitment to the agreement, according to Rashidi.
Rashidi explained that the market is now stable enough to accommodate any issues that do not have a major impact on supply and demand, adding: "control of production will insure stability of the market more than any factor such as relations between countries.”
But Rashidi believes that demand is still too high to suggest that more US exports could hurt OPEC members’ share of the market.
“We expect an increase in global demand in 2018 by 1.5-1.6 million barrels a day, which exceeds our expectations,” he said, indicating that an increased demand can allow the market to absorb all production, either from conventional or unconventional sources such as shale oil.”
Addressing the upcoming Muscat meeting in March, Rashidi indicated that it will focus on reviewing the technical committee for the agreement and the market situation. The minister stated that the prices will not be on the meeting’s agenda given that all members are committed to the agreement until the end of 2018. The minister noted that they have agreed to “review the situation by June”.
OPEC and Non-OPEC members agreed during a meeting in Vienna in Dec 10, 2016 to limit oil output in reaction to a drop in oil prices at the time. In November, oil ministers from OPEC and non-OPEC member nations agreed to extend output cuts for the duration of 2018.
Earlier, oil minister said the oil market was expected to re-balance towards the end of 2018 and any strategy to exit a deal on supply cuts between OPEC and non-OPEC oil producers would be gradual.