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OPEC + statement: oil reserves are not low enough

UNITED STATES (OBSERVATORY) – Oil reserves in the countries of economic cooperation and development (OECD) are 2.83 billion barrels, which is still a lot to complete the deal to reduce oil production, the OPEC + monitoring committee told the meeting in Jeddah (Saudi Arabia) on Friday.

“The countries participating in the agreement demonstrated an unshakable commitment to achieve a rebalancing of the world oil market, as evidenced by the high level of implementation of the production reduction plan at 149%,” the Committee’s final communiqué (JMMC) notes.

“As a result, OECD commercial reserves were reduced from a peak of 3.12 billion barrels in July 2016 to 2.83 billion barrels in March 2018, which corresponds to a decrease of 300 million barrels. Nevertheless, the committee noted that current commercial reserves remain above the levels observed before the downturn in the market, “- noted in the committee statement on the outcome of the market discussion.

Oil quotes on world stock exchanges fell in 2014, although at some point that year oil prices reached $ 100 per barrel. The maximum oil prices fell in February 2015, falling to $ 28 per barrel.

Due to the fall in oil prices, many countries whose economy is built on oil exports have faced falling incomes and the subsequent budget deficit. To remedy the situation, OPEC and several of the world’s largest oil producers concluded a deal in December 2016 to reduce oil production by 1.8 million barrels per day.

The agreement on the reduction of production has been extended several times and is valid until the end of this year.

Today, the monitoring committee of OPEC + instructed the secretariat to conduct an in-depth analysis of the situation on the market.

JMMC urged all participating countries to continue to implement the agreement. The Committee noted the statements of Iraq, Kazakhstan, Libya and Venezuela on the commitment to reduce production.

The next meeting of the OPEC + monitoring committee is scheduled for June 21, 2018 in Vienna.

OPEC countries and partners in the production reduction deal in June will discuss a gradual increase in oil production, Alexander Minakin, the head of the Energy Ministry, Alexander Novak, said on the sidelines of the meeting of the OPEC + committee on monitoring the implementation of the agreement.

Oil prices since January 2018 have peaked since 2014 and remain high: the European standard is traded in London at $ 73.3 per barrel, the American mixture in New York – at $ 68 per barrel.

Such a price may well suit most of the oil-producing countries that seek to stabilize production and oil prices.

NOVAK:

“We have not formalized that we have reached the zero mark (surpluses of reserves – note ed.) Let’s see that there was no excess supply, so that the market was balanced in terms of supply and demand, so there is no such tight binding that zero – we agreed to look at the situation within the next two months.In general, we believe the market is moving very well, the agreement is valid until the end of the year.In June we will meet and can consider including the issue of reducing quotas if it is appropriate ” .