Oil producers outside of OPEC should cut their “irresponsible” output with excess supplies harming the market, United Arab Emirates (UAE) Minister of Energy Suhail al-Mazrouei said yesterday.
The oil market is oversupplied by 2 million barrels a day, Qatari Minister of Energy Mohammed al-Sada said at a conference in Abu Dhabi. OPEC has produced about 30 million barrels a day since January last year, while global output climbed more than 2 million barrels a day to 93.6 million barrels, according to data compiled by Bloomberg.
“We call on all other producers to stop the increase because the increase is harming the market,” al-Mazrouei said at the conference.
Brent oil prices tumbled 45 percent this year. OPEC decided last month to keep production unchanged at 30 million barrels, resisting calls from cash-strapped Venezuela that the group needs to stem the rout in prices.
“Irresponsible production from outside OPEC is behind the fall in prices,” al-Mazrouei said. “The market will improve over time.”
Output in the US is the highest in three decades, and production is poised to approach a 42-year high next year as declining equipment costs and enhanced drilling techniques more than offset the drop in oil markets, according to Troy Eckard at Eckard Global LLC.
Oil extraction is soaring at shale formations in Texas and North Dakota as companies split rocks using a process known as hydraulic fracturing, or fracking.
“We are now in a provisional, correctional period,” al-Sada said. “Markets have stabilization mechanisms that will bring stability. We don’t know exactly how long it will take, but it will stabilize because the current prices will separate the efficient producers from the producers who have high costs.”
Saudi Arabian Oil Minister Ali al-Naimi also said that “high-cost producers will not continue to increase production,” in a clear reference to output from North America.
He dismissed claims of a Saudi “plot” to push prices down for political goals, insisting that the kingdom’s policy is “based on pure economic principles.”
Russia and OPEC-member Iran, who rely heavily on oil revenues, have spoken of a conspiracy in the oil market to keep prices low.
Additional reporting by AFP
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