Oil cuts: OPEC meeting ends without agreement

*Cross-section of ministers at the 169th OPEC meeting in Vienna, Austria.

*Cross-section of ministers at the 169th OPEC meeting in Vienna, Austria.

Oscarline Onwuemenyi

03 June 2016, Sweetcrude, Abuja – The Organisation of Petroleum Exporting Countries (OPEC) meeting of oil ministers has broken up, without reaching any new agreements on production caps , continuing a hands-off policy that members say is gradually bringing supply and demand back into balance and boosting prices.

The 169th Meeting of the Conference of OPEC was held in Vienna, Austria, on Thursday, under the Chairmanship of its President, Dr. Mohammed Bin Saleh Al-Sada, Minister of Energy and Industry of the State of Qatar and Head of its Delegation.

Oil prices have remained volatile over the past many months, leading some OPEC members to demand production cuts to across the board to boost prices. But Iran was opposed to the supply curbs which some countries, including Saudi Arabia, had apparently been pushing for.

The idea of reintroducing a collective output limit was rejected. This means that each member will continue pumping oil unabated with the continued danger of weighing on oil prices.

OPEC’s official communique from the meeting said the group will monitor the oil market and likely convene again on Nov. 30 in Vienna.

The Conference decided to appoint Mr. Mohammed Sanusi Barkindo, from Nigeria, as Secretary General of the Organization, with effect from 1st August 2016, for a period of three years. In doing so, the Conference expressed its appreciation to HE Abdalla Salem El-Badri for his leadership of the Secretariat and the Organization during his tenure as Secretary General.

Barkindo is a former Group Managing Director of the Nigerian National Petroleum Corporation, NNPC.

The Conference congratulated Khalid A. Al-Falih on his appointment as Minister of Energy, Industry, and Mineral Resources of the Kingdom of Saudi Arabia. The Conference also paid a special tribute to Ali I. Naimi of the Kingdom of Saudi Arabia, for his outstanding contribution to OPEC.

Furthermore, the Conference expressed its appreciation to Wilson Pástor-Morris, Ecuador’s OPEC Governor and the country’s Ambassador to Austria, who was representing his country as its Head of Delegation. The Conference also extended its deepest condolences to the Government and people of the Republic of Ecuador for the tragic losses they suffered following the devastating earthquake that struck the country on April 16th.

The Conference also welcomed Fayadh Hassan Nima, Senior Deputy of Iraq’s Minister of Oil, who was representing his country as its Head of Delegation, and Mossa Elkony, Vice President of The Presidency Council of The Government of National Accord of Libya, who was present as his country’s Head of Delegation.

The Conference considered Gabon’s request to rejoin the Organization and decided to approve its admission with effect from 1st July 2016.

The Conference studied the Secretary General’s report, as well as the report of the Economic Commission Board and various administrative matters. The Conference welcomed the Paris Agreement taken at the COP21 meeting in December last year.

It stressed that the challenges related to the environment and climate change are a concern for us all. Member Countries are committed to supporting sustainable development and recognize the importance of continually looking to advance the environmental credentials of oil, both in production and use.

Having reviewed the oil market outlook for 2016, the Conference observed that non-OPEC supply, in response to market dynamics, peaked during 2015 and started declining, with supply expected to further decline by 740,000 barrels per day (b/d) in 2016.

Today, crude oil alone is lower by more than 1 million b/d from its peak at the beginning of 2015. Global demand is anticipated to expand by 1.2 mb/d after growing at 1.5 mb/d during 2015. This demand growth remains relatively healthy considering recent economic challenges and developments.

The Conference observed that, since its last meeting in December 2015, crude oil prices have risen by more than 80%, supply and demand is converging and oil and product stock levels in the OECD have recently shown relative moderation. This is a testament to the fact that the market is moving through the balancing process.

The latest numbers, however, still show OECD and non-OECD inventories standing well above the five-year average and these need to be drawn down to normal levels. The Conference also noted the very low investment level currently prevailing in the oil industry and emphasized the need to increase upstream investment in order to achieve long-term balance in the oil markets.

The Conference re-emphasized the coordination between Member Countries and with non-OPEC producers to ensure market stability in the global oil market; to obtain reasonable and sustainable revenue for oil-producing nations; and to provide a stable, reliable, efficient and economic supply to consuming countries and a fair return to investors in the oil industry.

Member Countries, in agreeing to this decision, confirmed their commitment to a stable and balanced oil market, with prices at levels that are suitable for both producers and consumers. While emphasizing its commitment to ensuring a long-term stable and balanced oil market for both producers and consumers, the Conference stressed that, given the current market conditions, the Secretariat should continue to closely monitor developments in the coming months, and if necessary recommend to Member Countries to meet again and suggest further measures according to prevailing market conditions. The Conference also called upon non-OPEC countries to join its endeavours, given the importance of cooperation among all major exporting countries to collectively balance the oil markets.

The Conference decided that its next Ordinary Meeting will convene on Wednesday, 30th November 2016 in Vienna, Austria.

The Conference expressed its continued sincere gratitude to the Government and to the people of the Republic of Austria, as well as the authorities of the City of Vienna, for their warm hospitality and excellent arrangements made for the Conference Meeting.

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    Almighty Father God will suddenly settle matters for OPEC. soon