OPEC+ begins to think about the future

© AP Photo / Hasan JamaliДобыча oil in the middle East. Archival photoOPEC+ begins to think about the future© AP Photo / Hasan Jamali

The Ministerial Committee for monitoring the implementation of the agreement OPEC+ Sunday spent in Oman, its first in 2018 meeting. Contrary to the expectations of many market participants, the meeting discussed the future strategy of the exit from the transaction, but rather the opportunity to continue the cooperation afterwards.

At the moment the OPEC agreement regarding the reduction of oil production valid until the end of 2018. In the framework of OPEC and several non-organisation countries (OPEC+) agreed to reduce their total production to 1.8 million barrels per day from the level of October 2016, of which 300 thousand are in Russia.

The monitoring Committee, established to monitor compliance with the Vienna agreement and to make recommendations for its improvement, are the representatives of Saudi Arabia, Venezuela, Kuwait, Algeria, Oman and Russia.

It’s time to think about the future?

The future format of cooperation of the OPEC countries+ after the Vienna deal is not yet defined. Time for that quite yet. However, judging by the statements of participants in Oman, OPEC+ is already starting to think about it.

«From now on, we as a United group we need to start thinking about ways and means of transformation of the Declaration on cooperation (OPEC+ — ed.) into a permanent mechanism to keep the interaction within the group» — said, in particular, the Minister of oil of Kuwait Bakhit al-Rashid at the opening session.

«While we have not agreed on the mechanism (future cooperation – ed.), but almost all States are willing to continue cooperation after 2018,» — said the Minister of energy of Saudi Arabia Khalid al-falih at the end of the meeting.

Russian energy Minister Alexander Novak, in turn, after the meeting revealed some details of future OPEC+ — more precisely, is only an outline.

According to him, OPEC+ upon expiration of the current agreement can continue to operate in a consulting format. The participating countries will meet periodically for consultations on the situation in the oil market, after agreeing on the frequency of such meetings. The number of participants in these consultations can be extended from the current 24 countries involved in the transaction OPEC+.


Meanwhile, OPEC transaction+ continues to operate, and the Ministers of the participating countries stress that to speak about it before the end. The main purpose of the agreement – the balance of supply and demand in the oil market — has not yet been achieved.

The main indicator of the recovery of such balance should be the reduction of commercial stocks of oil and oil products in the world to average over the last 5 years. According to al-falikha, from the beginning of 2017 at the moment, excess reserves declined from 340 million barrels to 120 million barrels. While full recovery of the balance of the market the Minister expects in late 2018 — early 2019.

Forecast for Novak a little more optimistic — the oil market will return to balance supply and demand in 2018. In turn, Minister of oil and gas of Oman Mohammed al-Rumhi believes that this can happen in the third quarter.

While Novak stressed that it is impossible to be guided in future decisions only on the price of oil, which is now at three-year highs. «The price factor is not the only factor when you need to start out of the deal. We watch the situation on the market. We don’t want some individual rates were as indicators. Should be a full market recovery,» said the Minister to journalists.

The monitoring Committee reported that OPEC+ at the end of December has fulfilled its obligations under the agreement to reduce output by a record 129% and the average for the entire 2017 at 107%. Following the meeting of the Committee, all OPEC+ reaffirmed their commitment to its obligations under the deal. While al-falih expressed confidence that the situation in the oil market as a result of the transaction will continue to improve.

The next meeting of the monitoring Committee of OPEC+ will be held in April in Saudi Arabia.

OPEC+ begins to think about the future© RIA Novosti, Integratiebeleid in fotomonster and objectives of OPEC