At 167th Meeting, OPEC Reiterates Commitment To Market Stability
THE Organisation of Petroleum Exporting Countries (OPEC) has reiterated its commitment towards the total recovery of the global oil market and enhancing market stability in the interests of all parties, as well as support of steady global economic growth.
Ostensibly reacting to that decision, oil prices rose yesterday, breaking a two-day losing streak, after the OPEC ministers kept their existing oil production target for another six months at a level below current output.
OPEC’s Alternate President (in the absence of a President, from Nigeria, which is yet to have Minister of Petroleum, who was elected at the last Summit), Dr. Mohammed Bin Saleh.
Al Sada, who also is the Minister of Energy and Industry and Head of Delegation of Qatar, stated this at the 167th meeting of OPEC Conference in Vienna, Austria yesterday.
In his opening address, Dr. Al Sada stated that since the last meeting of the conference in November last year, the world and indeed OPEC have witnessed much volatility in the global oil industry, stressing that prices fell from around $77 per barrel at the time to around $45 by mid-January this year.
He noted that although there has been some recovery since, OPEC does not believe actual market fundamentals warranted the almost 60 per cent fall in prices witnessed between June last year and January this year.
He added that there is evidence that speculators played some role in this fall. “The market has continued to see over supply and additionally, crude stocks have witnessed a significant build.
“US commercial crude oil stocks in April 2015 were 24 per cent higher than the same time last year, although they have fallen back a little in recent weeks.
“As a result of the downward price trend, a number of projects have been cancelled or put on hold and investment plans have been revised. Rig counts have fallen dramatically, and many industry workers have been laid off. The current environment is clearly challenging- and has become a test for both oil producers and hydrocarbon investors,” he said
Al Sada added: “At OPEC, we continue to monitor the situation and are looking at ways and means to address the challenges ahead.
“And for 2015, we are focused on how we see the market evolving, particularly over the second half of the year. The global economic environment shows some encouraging signs, although the outlook is patchy. Global growth for 2015 is forecast at 3.3 per cent, the same level as in 2014.
“World oil demand in 2015 is forecast to grow by around 1.2 million barrels per day, higher than the figure of 1 million barrels per day in 2014. The majority of this net oil demand growth will continue to be seen in non-OECD countries.
“In terms of oil supply, non-OPEC countries will see much lower levels of production growth in 2015 than in previous years. In fact, expected non-OPEC supply growth this year is just below 700,000 barrels per day, which is only around one-third of the growth witnessed in 2014.
“In North America, US tight oil and Canadian oil sands are anticipated to see lower growth following recent strong declines in rig counts.
“All this points to a more balanced market in the second half of 2015, with current estimates for OPEC crude demand at 30.3 million barrels per day in the third quarter, and 30.7 million barrels per day in the fourth quarter.
“Of course, stability will be of paramount importance for the industry in the years ahead, given the need for investments in capacity expansion to make sure the world has enough supply to meet expected future demand”.
According to Al Sada, as always, OPEC’s focus would be on enhancing market stability in the interests of all parties and in support of steady global economic growth.
He however urged member-states’ delegates to remember that this is not the responsibility of OPEC alone, stressing that if they wish to benefit from a more orderly oil market, all should be prepared to contribute to its stability.
In a warm welcome to Dr. Jamila Shu’ara, Permanent Secretary, Ministry of Special Duties and Inter-Governmental Affairs who headed Nigeria’s delegation to the conference, Al Sada, on behalf of the organisation, congratulated President Muhammadu Buhari on his inauguration last week.
The conference, during its deliberation, discussed developments that have taken place over the last six months and considered the market outlook for the remainder of this year.
It also considered the Secretary General’s report and the report of the Economic Commission Board.
The12-member group agreed on the deal at OPEC’s biannual ministerial meeting in Vienna, Austria.
Saudi Arabia’s oil minister, Ali al-Naimi, said the 12-member group had agreed to maintain their production target at 30 million barrels per day (bpd), saying OPEC had rolled over its target.
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