OPEC head believes oil producers on course for supply deal

PUBLISHED : Tuesday, 01 November, 2016, 8:02am
UPDATED : Tuesday, 01 November, 2016, 8:02am

OPEC’s most senior official said the organisation and other major oil producers are “on course” to deliver a deal next month that will temper global oversupply.

All of OPEC’s 14 members as well as erstwhile rivals such as Russia are committed to finalising the agreement, to be completed when the group meets November 30, Secretary-General Mohammed Barkindo said Monday in a Bloomberg Television interview.

Even Iraq, which has demanded an exemption from supply caps and vowed to increase production, is willing to play its part, he said.

Oil’s rally above US$50 a barrel has faltered amid doubts that the Organization of Petroleum Exporting Countries will make the supply cuts it pledged in Algiers last month as Iran, Iraq, Libya and Nigeria all seek to be excluded from the deal, while non-members such as Russia give equivocal signals of their support. At talks in Vienna last week, Barkindo warned of the consequences if producers don’t follow through on their agreement to reduce supply.

OPEC made “significant progress” when technical experts from member nations gathered in the Austrian capital on Friday to work on details of the deal, and again when they met the following day with representatives from Azerbaijan, Brazil, Kazakhstan, Mexico, Oman and Russia, Barkindo said. It’s too early to say how much these non-member producers may be willing to cut, he added.

Iraq Committed

“Come November 30, we are optimistic that we are going to get the required supply cut that will go a long way in re-balancing this market,” Barkindo said. He insisted Iraq is “committed to the implementation of the Algiers accord” and said he’s “confident that our non-OPEC friends will also contribute.”

OPEC officials stalled on deal to implement supply cut

OPEC agreed on September 28 in the Algerian capital that it would reduce output to a range of 32.5 million to 33 million barrels a day -- the first output cut in eight years -- to hasten the rebalancing of the oil market. The decision, which scrapped a two-year strategy of producing without restraint, would mean curbing the group’s output by as much 900,000 barrels a day.

Still, initial signs from the weekend’s discussions weren’t encouraging, with representatives from Brazil and Kazakhstan outlining plans to increase production on Saturday after talks concluded without any joint agreement.

While Russian President Vladimir Putin has pledged to cooperate, he’s been vague about whether the country will trim output or just freeze production at September’s post-Soviet record. Nonetheless, OPEC is “satisfied” with Russia’s involvement in the process and considers the issue of reducing or simply capping as “mere semantics,” Barkindo said.