With the oil production cuts, the market should stabilise. Image Credit: File photo

Abu Dhabi: UAE Energy Minister Suhail Al Mazroui said on Wednesday that a production cut of 1.2 million barrels of oil per day (mbpd) is enough to balance the oil market.

“I think 1.2 (million barrels per day) is enough. We are now seeing the correction, [particularly] in December before the deal, and in January, we will definitely carry on correcting the market and place it where it’s supposed to be at the five-year average (inventory levels),” he said while speaking at Gulf Intelligence Energy forum in Abu Dhabi.

“There is another factor that people are not looking at. Oil productions from Iran and Venezuela, which are not included in the output cut deal, are in decline.”

The comments came as oil prices trended lower in the last few weeks due to oversupply and concerns on global economic growth.

From more than $85 (Dh312) per barrel in October, oil prices plunged to less than $60 per barrel in recent times.

Al Mazroui also said that the trade war between China and the US, as well as the American shale oil production, could affect the oil markets in 2019.

“We don’t want to see 2014, 2015 and 2016. They overproduced and flooded the market. Opec and non-Opec are keen on correcting the market and helping everyone including producers and consumers.”

Oil-producing countries are cutting production by 1.2 million barrels per day from January 2019 for six months to rebalance oil markets and support oil prices.

The deal was struck at a meeting of Opec and non-Opec members, including Russia, in Vienna on December 7.

As part of the agreement, Opec (Organisation of Petroleum Exporting Countries) are reducing their output by 800,000 barrels per day and non-Opec by 400,000 barrels per day, with exemptions to Iran, Venezuela and Libya, as their productions are hit by sanctions, economic turmoil and conflict, respectively.

A number of energy experts including Adnoc upstream director Abdulmunim Saif Al Kindy are taking part in the one-day forum.