Kuwait says market conditions to determine any extension of OPEC-led oil cuts

OPEC, Russia and several other non-OPEC producers began to cut supply in January 2017 in an effort to lift oil prices. (Reuters)
Updated 16 April 2018
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Kuwait says market conditions to determine any extension of OPEC-led oil cuts

KUWAIT: Kuwait’s oil minister said on Monday a pact between OPEC and non-OPEC producers to curb supplies would run to the end of the year and market conditions would determine whether to extend it further.
Bakhit Al-Rashidi also said the meeting of the Organization of the Petroleum Exporting Countries in June in Vienna would offer a chance to review the deal, adding that oil markets were heading in the right direction for stability.
“The agreement will continue until the end of this year,” the minister told reporters at an oil industry event in Kuwait.
He added that “it would depend on market conditions whether to extend this agreement beyond 2018 or to reach a permanent agreement between OPEC and non-OPEC to support market stability,” saying this issue would be reviewed later in the year.
An initial draft of a longer-term alliance agreement between OPEC and non-OPEC oil producers would be discussed at the June meeting, OPEC Secretary-General Mohammad Barkindo said last week.
OPEC, Russia and several other non-OPEC producers began to cut supply in January 2017 in an effort to lift oil prices. The pact runs until the end of this year, and the June meeting will see participants decide their next course of action.
A surplus in global oil inventories was close to evaporating, OPEC said last week, citing healthy energy demand and its own supply cuts. It also revised up its forecast for output from rivals that have benefited from higher oil prices.
OPEC has a self-imposed goal of bringing oil inventories in industrialized countries down to their five-year average.
Barkindo said in Kuwait on Monday that oil stocks in the developed world fell in February to below 50 million barrels above the latest five-year average and that the declining trend would continue over the coming months.


‘Get prices down’ Trump tells OPEC

Updated 44 min 33 sec ago
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‘Get prices down’ Trump tells OPEC

  • Trump highlights US security role in region
  • Comments come ahead of oil producers meeting in Algeria

LONDON: US president Donald Trump urged OPEC to lower crude prices on Thursday while reminding Mideast oil exporters of US security support.
He made his remarks on Twitter ahead of a keenly awaited meeting of OPEC countries and its allies in Algiers this weekend as pressure mounts on them to prevent a spike in prices caused by the reimposition of oil sanctions on Iran.
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!” he tweeted.
“We will remember. The OPEC monopoly must get prices down now!”
Despite the threat, the group and its allies are unlikely to agree to an official increase in output, Reuters reported on Thursday, citing OPEC sources.
In June they agreed to increase production by about one million barrels per day (bpd). That decision was was spurred by a recovery in oil prices, in part caused by OPEC and its partners agreeing to lower production since 2017.
Known as OPEC+, the group of oil producers which includes Russia are due to meet on Sunday in Algiers to look at how to allocate the additional one million bpd within its quote a framework.
OPEC sources told Reuters that there was no immediate plan for any official action as such a move would require OPEC to hold what it calls an extraordinary meeting, which is not on the table.
Oil prices slipped after Trumps remarks, with Brent crude shedding 40 cents to $79 a barrel in early afternoon trade in London while US light crude was unchanged at about $71.12.
Brent had been trading at around $80 on expectations that global supplies would come under pressure from the introduction of US sanctions on Iranian crude exports on Nov. 4.
Some countries has already started to halt imports from Tehran ahead of that deadline, leading analysts to speculate about how much spare capacity there is in the Middle East to compensate for the loss of Iranian exports as well as how much of that spare capacity can be easily brought online after years of under-investment in the industry.
Analysts expect oil to trend higher and through the $80 barrier as the deadline for US sanctions approaches.
“Brent is definitely fighting the $80 line, wanting to break above,” said SEB Markets chief commodities analyst Bjarne Schieldrop, Reuters reported. “But this is likely going to break very soon.”