Abu Dhabi: The decision by oil producers to cut output by about 1.8 million barrels per day from next year will positively impact oil markets, the UAE energy minister said in Abu Dhabi.
“The stakeholders [both Opec and non-Opec members] are committed to the decision to cut oil production in a bid to regulate oil markets and it will have positive impact on oil markets,” Suhail Al Mazroui told reporters on the sidelines of Federal National Council session on Tuesday.
He did not give a specific figure to what extent oil prices will rise but said that Opec members are coordinating with each other to reduce supplies from next year to help the markets.
“We expect oil prices to be better from January and rebalancing of oil markets to take place in the first quarter.”
“The UAE has started to reduce oil production to follow the Opec decision.”
In a landmark deal on November 30, Opec member countries have agreed to cut output by 1.2 million barrels per day to rebalance oil markets from January 1.
Countries from outside the group would also contribute by reducing output by 558,000 barrels per day including some of the major oil producers like Russia and Kazakhstan.
This is the first time in 15 years that both Opec and non-Opec countries have come together to slash production to prop up oil prices.
Oil prices have surged to their highest level since mid-2015 following a decision by non-Opec members to cut output by 558,000 barrels per day last week.
Brent crude is currently trading at slightly more than $55 per barrel on Tuesday, up by about 0.55 per cent. US crude West Texas Intermediate is trading at $52.19 per barrel at around 2pm UAE time.
Abu Dhabi National Oil Company (Adnoc) said last week it would slash crude supplies by 3 to 5 per cent from January, in a sign of compliance with Opec agreement, a report by Reuters said.
Apart from the UAE, key oil producers like Saudi Arabia, Qatar, Oman and Kuwait have all announced cuts and plans to inform customers about the decision.
(With inputs from Samir Salama, Associate Editor)
