OPEC sees the oil market as well supplied and is wary of revisiting a glut next year, the group’s secretary-general said yesterday, suggesting that producers are in no rush to expand a June agreement to increase output.
Oil prices have rallied this year on expectations that US sanctions on Iran would strain supplies by lowering shipments from OPEC’s third-largest oil producer. Brent crude last week reached US$86.74, the highest since 2014.
OPEC secretary-general Mohammad Barkindo, speaking at the Oil & Money conference in London, said there are many non-fundamental factors influencing the market that are beyond oil producers’ control.
“The market has been reacting to perceptions of a possible supply shortage. The market remains well supplied,” he told a briefing.
“The projections for 2019 clearly show a possible rebuild of stocks,” he said of the supply and demand balance for next year.
One of those factors, according to analysts and some OPEC members, has been the decision by US President Donald Trump to reimpose sanctions on Iran.
Trump has demanded that OPEC cool prices by pumping more oil.
Barkindo, asked whether Trump’s criticism of OPEC was unfair, said: “The market is currently being largely driven by decisions taken elsewhere — outside OPEC, outside non-OPEC.”
Barkindo, responding to a question whether producers needed to go beyond full delivery of the agreement, said they were taking it step by step.
OPEC and allied producers — not including the US — in June agreed to return to 100 percent compliance with output cuts that began in January last year, after months of underproduction in Venezuela and elsewhere pushed adherence above 160 percent.
Producers have yet to increase supply enough to reach 100 percent.
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