Consensus on oil output cut: Bahrain
Oil producers have a consensus to cut output at the upcoming meeting in Vienna next week, Bahrain’s oil minister said on Wednesday.
“There is a consensus to reduce volume so much so that it goes back to zero volume from Iran,” Bahrain Oil Minister Sheikh Mohamed bin Khalifa bin Ahmed Al Khalifa said during an interview in reply to a question about the agreement between Opec and non-Opec members ahead of meeting set to take place in Vienna on December 5-6.
He said under the US sanctions, the market was expecting that Tehran will be allowed zero exports but some exception was given. He warned that due to a consistent decline in investments in oil exploration and production, the world could lose five million barrels of oil per day as exporters see supply issues arising in 2021.
“Oil takes a long time to increase production. Since 2015 when prices crashed, there was a flight of investment of about $1 trillion taken out of market,” Sheikh Mohamed added.
“You just lost four years of investments... now the world produces 100 million barrels per day. But due to lack of investments over the years, production from every oil well is going to decline 5 per cent. So you are going to lose 5 per cent or five million barrels of 100 million per day. Oil exporters say we have supply challenge coming in 2021 due to lack of investments,” Al Khalifa said during an interview at the World Islamic Banking Conference in Bahrain.
“The next three years will see potential supply challenge and if dollar becomes stronger, it will be even worse for the consumers,” he added.
Crude prices rose above $60 on Wednesday ahead of an Opec meeting at which the producers are likely to announce cuts in production due oversupply.
Bahrain’s minister insisted that Opec wants to make sure that market is balanced and there is healthy flow of investments. “Rather than focusing on the price, the meeting next month is going to look at inventory buildup and Iran sanctions and what they need to do to bring balance quicker in the market,” he said.