21 December 2018, Sweetcrude, Lagos — Following recent reports and speculations by analysts that OPEC’s Declaration of Cooperation, DoC might no longer be able to keep oil glut down for too long, Secretary General of the organization, Mohammed Barkindo, has impressed that the agreement’s impact has been “transformative”.
In a lecture delivered by the OPEC chief in Angola, he said the “long-absent” element of stability in the market was re-introduced by the DoC.
The Organisation of the Petroleum Exporting Countries, OPEC, and its non-OPEC partners, Russia as the head, had agreed to cut production late 2016 after oil prices crashed from above $100 per barrel below $30p/b.
The agreement had since been renewed, with the latest cuts being 1.2 million barrels per day- 800 thousand barrels for OPEC members, and 400 thousand barrels for non-OPEC members.
Amidst the pressure to cut and boost prices, shale boom, and President of the United States’, Donald Trump’s clamour for more oil in the market, OPEC’s major role and significance in stabilizing the market had come under the fire.
“If I was to use a single word to describe the impact of this cooperation on the oil market, it would be: transformative. A long-absent element of stability has been reintroduced. There have been significant changes in industry-wide and public perceptions of OPEC. The Organization has ably demonstrated its credentials as a body committed to international cooperation, working with other producers, honouring its commitments and promoting mutual respect among all nations”, Barkindo said.
He said bringing together 25 sovereign producing nations is “unparalleled” in the history of the oil industry, as the enhanced relations between participating countries now constitute a fundamental and essential feature of the ‘new world of energy.’
“However, most importantly of all, the multiplier benefits of the ‘Declaration of Cooperation’ have been immensely significant. This was apparent in the conclusions of the IMF in a publication entitled “The Global Economic Recovery 10 years after the Financial Meltdown”.
“After faltering at times over the past 10 years, the global economic recovery experienced a long-awaited synchronized growth upswing 2017-18.”
This global economic upsurge he said, has occurred at exactly the same time as the DoC has been operational.
“Oil market balance begets prosperity”.
“Consider the fact that over the last two years, the global economy has had the assurance from the ‘Declaration of Cooperation’ strategic partners that they will take the necessary measures to contribute to a balance between supply and demand. Can one quantify how important this guarantee of responsible leadership, this proactive dependability, has been?”
“Throughout this entire process, the partners have solicited and responded to the views and concerns of producers and consumers. We have championed consumer and producer dialogue, benefiting from the tremendous partnership with the IEF. OPEC’s energy dialogues with the EU, Russia, China, India, and independent suppliers have further harnessed information exchange and fed into our joint strategies”.
According to him, the DoC partners have been “responsible and responsive; proactive and professional; adroit and adaptive”.