OPEC: Oil market likely to rebalance early 2019

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Oil ministers from leading OPEC nations said on Sunday that they expect prices will arrest their recent slide and rebalance early next year when a deal on new production cuts takes effect.

Oil prices have shed more than 36 percent since early October to trade at 54 U.S. dollars per barrel, due to fears of oversupply and weak global demand.

OPEC and its allies including Russia agreed in early December to cut oil production by 1.2 million barrels a day from January 1, in a bid to shore up sagging prices.

"Based on available figures, we have around 26 million barrels of surplus ... compared to 340 million barrels in early 2017," said Suhail al-Mazrouei, president of OPEC and UAE Energy Minister.

Suhail al-Mazrouei, UAE energy minister and OPEC president speaks to reporters ahead of the 175th OPEC meeting in Vienna, Austria, December 6, 2018. /VCG Photo

Mazrouei said that there has been higher than anticipated supply on the market in recent months, as U.S. sanctions on Iran have had a less pronounced effect on the country's oil exports than had been expected.

Iraq's oil minister Thamer al-Ghadhban said that there is a consensus among OPEC and non-OPEC producers to comply with the new agreement to trim output in a bid to stabilize the market. He believes that the new measures taken by producers will "stop the slide in oil prices."

He said the new agreement is valid for six months and the ministers will meet in April to assess the impact of the cuts.

Mazrouei said that producers are ready to renew the agreement or increase cuts in case the market does not balance.

OPEC has lately been cooperating closely with Russia and other non-cartel producers, in a bid to impose greater control over global output and prices.

During their meeting next April, the producers are also expected to sign a long-term agreement to formalize cooperation between OPEC and non-OPEC members over oil output.

Source(s): AFP