OPEC + starts to think about the future
The ministerial committee for monitoring the implementation of the OPEC + agreement held its first meeting in Oman on Sunday. Contrary to the expectations of many market participants, the meeting discussed not the future exit strategy, but, on the contrary, the opportunity to continue cooperation upon its completion.
At the moment, OPEC + agreement on oil production reduction is valid until the end of 2018. Within its framework, OPEC and a number of non-member countries (OPEC +) agreed to reduce their production by a total of 1,8 million barrels per day from the level of October 2016, of which 300 thousand fall to Russia.
The monitoring committee, established to monitor compliance with the Vienna agreement and make recommendations for its adjustment, includes representatives of Saudi Arabia, Venezuela, Kuwait, Algeria, Oman and Russia.
Is it time to think about the future?
The future format of cooperation between OPEC + countries at the conclusion of the Vienna deal has not yet been determined. Time for this is still enough. However, judging by the statements of the participants in the meeting in Oman, OPEC + is already starting to think about it.
The Minister of Energy of the Russian Federation Alexander Novak, in his turn, after the meeting, revealed some details of the future of OPEC + - more precisely, so far only sketches.
According to him, OPEC + after the expiration of the current agreement can continue to cooperate in a consultative format. The participating countries will meet periodically for consultations on the situation in the oil market, having previously agreed on the frequency of such meetings. At the same time, the number of participants in these consultations can be expanded from the current 24 countries participating in the OPEC + deal.
THE PRESENT OPEC +
Meanwhile, the OPEC + deal continues to operate, and the ministers of the participating countries emphasize that it is too early to talk about its completion. The main goal of the agreement - the balance of supply and demand in the oil market - has not yet been achieved.
The main indicator of the restoration of such a balance should be the decline in commercial reserves of oil and oil products in the world to an average value over the past 5 years. According to al-Falih, from the beginning of 2017 to the present moment the surplus of reserves has decreased from 340 million barrels to 120 million barrels. At the same time, the Minister expects the full restoration of the balance in the market in late 2018 - early 2019.
The Monitoring Committee reported that the OPEC + countries fulfilled their obligations under the agreement on cutting production by a record 129% in December, and on average for the entire 2017 - by 107%. Following the meeting of the committee, all the OPEC + countries confirmed their commitment to their obligations under the deal. At the same time, al-Falih expressed confidence that the situation in the oil market will continue to improve as a result of the transaction.