Opec could extend cuts in November
abu dhabi/london — The Opec may need to consider extending its oil-cuts agreement when the group meets in November, as crude markets are taking too long to recover, UAE Energy Minister Suhail bin Mohammed Faraj Al Mazroui said.
The Organisation of Petroleum Exporting Countries, which already prolonged its cuts accord with other major producers through the first quarter of next year, may have to discuss a further extension, Al Mazrouei said in an interview with Bloomberg TV’s Francine Lacqua. Increased output from Libya and Nigeria, which are both exempt from cutting, is complicating the Opec’s effort to rebalance the market, he said.
“It looks like we may need to consider expanding the time horizon” of the output curbs, he said. “But that’s a decision that’s going to be discussed probably in our next meeting in November.” The UAE is the fourth-biggest producer in the Opec , which plans its next ministerial meeting on November 30.
The recovery in crude prices “will drag us into 2018,” he said. “Is it going to be the first quarter or the second half of 2018? We need to monitor that.” The Opec needs more reductions in oil inventories and “some control of production from some of those countries which were not part of the deal,” he said.
Rising supply from Nigeria and Libya, exempted last year from trimming output because of their internal strife, is proving to be a challenge for the Opec and allied producers as they try to counter an oversupply, Al Mazrouei said.
“We need to think of a ceiling or a mechanism for how we control the production from those two countries,” he said. Libya and Nigeria added a combined 440,000 barrels a day of production in the last two months, according to data compiled by Bloomberg. That’s equivalent to about a third of the reductions achieved by fellow Opec members. Meanwhile, oil prices extended gains on Tuesday after Saudi Arabia pledged to curb exports from next month and the Opec called on several members to boost compliance with output cuts to help rein in oversupply and tackle flagging prices.
Brent crude futures were up 68¢ at $49.28 a barrel by 1054GMT. US West Texas Intermediate futures rose 64¢ to $46.98 a barrel.