ABU DHABI — The world oil market has the potential to reach full stability in 2018 as the level of inventories are expected to be reduced to a comfortable level, said Suhail Bin Mohammad Faraj Faris Al Mazrouei, Minister of Energy and Industry, ahead of the Opec Ministerial Meeting in Vienna where it has been agreed to extend oil output cuts until the end of 2018.
In an interview with the Special Edition of the Opec Bulletin before the first anniversary of Opec and Non-Opec ‘Declaration of Cooperation’, marked on 10th December, the minister said, “For stability to happen, I think we need to consider renewing or extending the deal further and we need to see the same level of compliance achieved in 2017.”
The Declaration of Cooperation’ was a landmark decision reached by 13 Opec and 11 non-Opec producers at the joint ministerial-level meeting in Vienna on 10th December 2016. Opec and its allies outside the group agreed on 30th November to maintain oil production cuts until the end of 2018. A joint Opec and non-Opec communique said the next meeting in June 2018 would present an opportunity to adjust the agreement based on market conditions.
“The Declaration of Corporation’ by Opec and non-Opec participating countries gave hope and stability to the market at a very critical time, especially when the non-Opec oil producing countries showed commitment in compliance with the Declaration of Cooperation, even though this is the first time that they worked together with Opec, which was a testimony to their responsible efforts toward market stability,” said Al Mazrouei when asked about the importance of the Declaration of Cooperation’ for medium- and long-term oil market prospects.
Replying to a question about how the oil market and the global economy would have been looking like today but for the deal, the UAE minister said, “The market was at risk of staying unbalanced for a longer time in oversupply mode, which could lead to dropping of investors’ confidence in the sector. That lack or delay of investment in the upstream oil sector could lead to another shortage of supply in the future when demand outpaces declining supply, which will lead to a sudden oil price hike that could slow down the world economy.”
Speaking about the 2016 Declaration of Cooperation’, which brought 24 Opec and non-Opec producing nations together to adjust production, he stated that it was not only useful but necessary. “The deal was a historical achievement for Opec and the countries that joined it. Together we demonstrated our commitment to market stability. The results of such cooperation benefited the whole industry. Without that 24 countries alignment, it would have been difficult and unfair for Opec countries to unilaterally adjust their production voluntarily.”
Al Mazrouei was elected as president of the Opec Conference for one year, with effect from 1st January 2018 during the Opec Ministerial Meeting on November 30th.