11/12/2017 05:56 AST
Kuwait’s oil minister Essam al-Marzouq said on Sunday that Opec and other oil producers will study before June the possibility of an exit strategy from the global oil supply-cut agreement.
“There are still meetings every couple of months for the ministerial monitoring committee, and there will be a study formed for the possibility of an exit strategy... before June,” he told reporters.
The Organisation of the Petroleum Exporting Countries and non-Opec producers led by Russia have agreed to extend oil output cuts until the end of 2018 as they try to clear a global oil glut while signalling a possible early exit from the deal if the market overheats.
Opec meets next in June, while the next meeting for the ministerial monitoring committee, known as the JMMC, is due to be held in January in Oman.
Russia, which this year reduced production significantly with Opec for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival US shale firms don’t boost output further.
Moscow needs much lower oil prices to balance its budget than Opec’s leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude.
Russian Energy Minister Alexander Novak said on Wednesday that it was too early to talk about a possible exit from the global deal to cut oil production, and the eventual withdrawal from the agreement should be gradual.
Novak said the process of exiting the deal may take between three and six months, depending on how the global oil market has recovered by then, and on the scale of oil demand.
Under the current deal the producers are cutting supply by about 1.8 million barrels per day (bpd).
Opec’s stated mission is “to coordinate and unify the petroleum policies of its member countries and ensure the stabilisation of oil markets, in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry.
The organisation is also a significant provider of information about the international oil market. As of May 2017, Opec’s members are Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia (the de facto leader), United Arab Emirates, and Venezuela, while Indonesia was a former member. Two-thirds of Opec’s oil production and reserves are in its six Middle Eastern countries that surround the oil-rich Gulf.
Economists often cite Opec as a textbook example of a cartel that cooperates to reduce market competition, but whose consultations are protected by the doctrine of state immunity under international law.
The Gulf Today
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