AFP: Russia’s energy minister said yesterday that he was in favour of continuing cooperation with the OPEC oil cartel as their joint accord to cap output bears fruit in boosting the price of crude.
“We should keep the pace and definitely moreover follow through on the concerted action,” Alexander Novak said at the start of a meeting of oil-producing countries in Vienna.
“And more importantly, we should elaborate a strategy for the future that we should abide by fully from April 2018” when the current agreement expires, Novak said through an interpreter. He said that, following an accord struck in late 2016 among 24 oil nations including Russia and most of OPEC, “by and large, I would like to say that the fundamentals are stabilising.” Before the landmark accord -- which after being extended earlier this year is due to run until March 31, 2018 -- the glut saw oil prices plummet from over $100 a barrel in 2014 to a 13-year low of under $30 last year.
The price of oil has seesawed considerably in the last six months, but this week has traded around the US$50-per-barrel level, suggesting that the agreement was finally bearing fruit.
Brent crude, the international benchmark, closed at US$56.43 a barrel on Thursday, its highest since February and up 25 percent since June.
“We have every reason to be pleased with the steady progress we have made in our collective efforts to overcome the challenges of the current oil market cycle, which is perhaps the worst of all the previous cycles that we have witnessed in recent times,” OPEC’s secretary general Mohammed Barkindo said at the talks.
Recent market data showing a reduction in a global glut that has depressed oil prices “confirm beyond all reasonable doubt... that the market rebalancing is on course,” the Nigerian said.
Officially, yesterday’s meeting at the headquarters of the Organization of the Petroleum Exporting Countries of a six-nation monitoring committee is to review compliance with the accord.
But there was speculation that the gathering might recommend that the deal be extended.
“OPEC members are trying to target a figure of close to US$60 a barrel. We’re not too far away from that,” Emmanuel Ibe Kachikwu, Nigeria’s minister for petroleum resources, told Bloomberg.
“If we get to March (when the deal expires) and find that there’s a need to do more, I think we will.”
The danger, however, is that higher crude prices could help shale oil producers in the United States - outside the deal - to ramp up output and put the market back in surplus.