Cartel points to larger 2017 oil surplus despite deal to cut
ISTANBUL, Oct 12, (RTRS): OPEC sought on Wednesday to build momentum for its plan to cap global oil production, saying it will extend invitations to more non-member producers after holding informal talks with Russia and Mexico in Istanbul.
Representatives of OPEC and non-OPEC countries will hold a technical meeting on Oct 28-29 in Vienna to continue to discuss “a road map” towards an agreement, Qatar’s Energy Minister Mohammed al-Sada told reporters after the meeting on the sidelines of the World Energy Congress in Istanbul.
It was unclear which other countries would join the initiative.
No specific production figures were discussed during Wednesday’s meeting but more details will likely be discussed at the technical meeting in Vienna, Russian Energy Minister Alexander Novak said. Russian President Vladimir Putin said on Wednesday he saw no obstacles to a global agreement on an oil output freeze.
The Organization of the Petroleum Exporting Countries last month in Algiers agreed on a modest production cap to a range of 32.50-33.0 million barrels per day (bpd). OPEC last month pumped 33.39 million bpd.
Al-Sada said there had been a “positive understanding of the situation on what could be the role of OPEC and what could be the role of non-OPEC” in balancing the oil market.
The International Energy Agency said global oil supply could fall in line with demand more quickly if OPEC and Russia agree to a steep enough cut in production, but it is unclear how rapidly this might happen.
Any deal would face challenges from a 3 billion barrel global inventory build in recent years as well as efforts
by OPEC members Libya and Nigeria to increase production curtailed by conflict.
Iran is also seeking to return its production to levels reached before it was hit by international sanctions in 2012.
OPEC reported a increase in its oil production in September to the highest in at least eight years and raised its forecast for 2017 non-OPEC supply growth, pointing to a larger surplus next year despite the group’s deal to cut output. The Organization of the Petroleum Exporting Countries pumped 33.39 million barrels per day (bpd) last month, according to figures OPEC collects from secondary sources, up 220,000 bpd from August, OPEC said in a monthly report on Wednesday.
The figures underline OPEC’s challenge in seeking to restrain supplies for the first time since 2008 to curb a persistent supply glut and prop up prices. Oil is trading near $53 a barrel, less than half the price hit in mid-2014.
“Inventories stand near all-time highs worldwide,” OPEC said in the report. “Although in recent weeks these high levels have been slightly drawn down.” To speed up a rebalancing of the market, OPEC agreed at a meeting in Algeria on Sept. 28 to cut supply to between 32.50 million bpd and 33.0 million bpd. The group hopes to finalise details, including how much each of the its 14 members can pump, at a meeting in November.
The report showed the supply boost
in September mostly came from Libya and Nigeria, which are restoring output after disruptions, and from Iraq, which has questioned the accuracy of OPEC’s secondary-source figures.
OPEC uses two sets of figures to monitor its output: figures provided by each country, and secondary sources which include industry media. The reason why two sets of figures are used is because of past disputes over how much countries were really pumping.
Iraq told OPEC it produced 4.775 million bpd in September, while the secondary sources put output at 4.455 million bpd. From Iraq’s point of view, joining the OPEC supply cut deal from the higher figure would be more favourable.