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No oil production hike — OPEC

/ 07:09 AM September 24, 2018

In this April 24, 2015 file photo, pumpjacks work in a field near Lovington, New Mexico, in the United States. AP FILE

ALGIERS, Algeria – A meeting between oil producing countries on Sunday decided not to alter supply to the global market, after calls by US President Donald Trump for an immediate hike in output to reduce prices.

A committee of participating states “expressed its satisfaction regarding the current oil market outlook with an overall healthy balance between supply and demand”, a statement said, at the end of a meeting in Algiers.

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But Saudi Arabia’s energy minister Khalid al-Falih left the way open to a future production hike, as supplies tighten due to the US imposing sanctions on Iranian oil from November this year.

“It is critical that we continue to foresee and anticipate changing market supply and demand balances and take proactive actions to avoid conditions that could make (oil) consumers uneasy and anxious,” said Falih, who chairs the joint committee of OPEC and non-OPEC countries.

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The OPEC cartel in December 2016 concluded an agreement with non-member states — including Russia — to reduce output in order to arrest sliding prices.

Sunday’s meeting in Algiers brought together OPEC oil ministers and non-OPEC signatories to the 2016 agreement, as they seek to extend their cooperation.

Trump has repeatedly called for a hike in production by countries other than Iran to reduce oil prices, which have partially recovered since the December 2016 agreement, to trade close to $80 per barrel this month.

“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!” Trump tweeted on Thursday.

“We will remember. The OPEC monopoly must get prices down now!”

The committee formed by OPEC and non-OPEC oil producers “was directed to study the 2019 outlook and present options on 2019 production levels to prevent market imbalance”, the closing statement in Algiers added.

‘Spare capacity’ ready to deploy

Falih said attending ministers “showed us that they have spare capacity that they are ready to deploy if there is demand for it, if it is required by any shortfall”.

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But he said producers would reduce “supply if there is ever… a demand shock to the market”.

“It’s premature to say what we’re going to do in 2019,” he added.

Russia’s energy minister Alexander Novak on Sunday appeared to back a continuation of the partnership between OPEC and non-OPEC member states.

“We need to give serious thought to expand our partnership beyond this year to tackling the new challenges that appear ahead of us,” he said.

After pulling out of the 2015 Iran nuclear deal in May this year, the Trump administration has pledged to impose an embargo on Iranian oil from November 5.

Iran’s OPEC representative Hossein Kazempour Ardebili on Sunday said his country was continuing to meet its OPEC quota share.

“I expect all countries to exercise their sovereignty and not to abide by the instructions of Trump,” he said.

But output from Iran has hit its lowest level since July 2016, according to the International Energy Agency, as top buyers India and China distance themselves from Tehran in anticipation of the US sanctions. /cbb

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TAGS: Business, oil, oil price, Oil production, OPEC
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