JMCC: Despite oil gaining ground, no time to sit back and relax

The energy world will be watching closely as members of OPEC hold final meeting in Vienna on Thursday to decide on whether to extend the oil production cuts until the end of 2018.

To remind, on December 3 2016, OPEC and several Russia-lead non-OPEC nations agreed to keep oil production limited to help the oil prices go back up. This was then extended in May 2017.

This deal to lower the output by a total of about 1.8 million barrels per day is set to expire in March 2018, and the OPEC members will be voting today on whether to extend further.

Based on the signals in advance to the Vienna meeting, the extension is expected.

The compliance to the pledged cuts is monitored by a body called Joint Ministerial Monitoring Committee (JMMC).

In his remarks on Wednesday, Issam A. Almarzooq, Kuwait’s Minister of Oil and Minister of Electricity and Water, and the Chairman of the JMCC expressed “deep appreciation to each and every OPEC Member Country and participating non-OPEC producer, who made great sacrifices, worked the extra hours and went the extra mile to help us get to where we are today. With your continued dedication and determination, I am confident we will reach the mountain top together”

No time to sit back and relax

He said it was evident the oil market had strengthened and is on path to rebalancing.

“The destocking process, both onshore and offshore, has continued at an accelerated pace in recent months. From May to October, the OECD stock overhang fell by around 140 mb to stand at 140 mb above the five-year average in October. Looking at the first ten months of the ‘Declaration of Cooperation’ there has been a decline of around 200 mb.”

“Let us not take this positive momentum as a reason to sit back and relax. Rather, let us be energized by the progress we have made, and continue to push onward until we reach our final goal.

We are clearly on the right path, but there is still work to be done to bring the remaining inventories down to the latest five-year average, at which point we can say we have reached our objectives of a balanced and stable global oil market.”

Offshore Energy Today last week spoke OPEC Secretary General Mohammad Barkindo.

When asked whether he expected to see the agreement extended for another year or so, Barkindo responded diplomatically: “This anniversary will mark another milestone in our global efforts with our non-OPEC friends to restore stability for the global oil market.”

Saudi Energy minister and President of the OPEC Conference Khalid Al-Falih on Wednesday used the opportunity to thank the country’s cutting more than pledged, but also called for those not performing as expected to raise their game:

He said: “…I would like to stress that in the coming months our work will continue. We will need the full commitment of all countries.  While I want to congratulate and thank the over-performing members for their dedication, I want to urge those few under-performing countries to catch up. To succeed in the future, it is crucial that we have everyone on board, and in our shared mutual interest I’m confident that I can count on your support.”

Offshore Energy Today Staff