OPEC and allied oil producers will cut or adjust production as needed to balance the market, the group’s president, United Arab Emirates Energy Minister Suhail Al Mazrouei, said Wednesday.
If OPEC needs to reduce output, it will do so, he said in an interview in Abu Dhabi. The producers will take whatever steps are necessary to keep the market stable and keep crude inventory levels where they are, Al Mazrouei said. Oil production is above expectations, and OPEC+ needs to change its strategy, he said.
“We have cut in the past to reach the market balance, and if we need to cut production to keep the market balanced, we will,” Al Mazrouei said. “The group will reach consensus on whatever is required to adjust the market.”
Oil has barely recovered from a record 12-day decline as investors fled a market battered by swelling supplies and a darkening demand outlook. Futures in New York were 0.8% higher after plunging 7.1% in the previous session in the biggest one-day drop in more than three years.
Crude inventories in industrialized nations have increased for four consecutive months and are set to jump by 2 MMbpd in the first half of 2019 if current output is maintained, the International Energy Agency said Wednesday in its monthly report. OPEC, in a report on Tuesday, said it sees demand for its own crude falling faster than expected next year as a slowing global economy crimps demand and rival supplies surge.
Oil market fundamentals “are still reasonable” and don’t justify the sell-off on Tuesday, Al Mazrouei said. OPEC+ isn’t targeting a price but is seeking instead to keep crude inventories in line with their five-year average, he said. OPEC plans to gather next month in Vienna to assess the market.
“In December when we meet, if there’s a requirement to curtail, whatever the required cut, we will cut in accordance to what we agree on,” Al Mazrouei said. “Whatever price that we end up with, the market will decide the price, not us.”
OPEC’s biggest producer Saudi Arabia has expressed the need for oil producers to cut 1 MMbpd, reversing a June decision to boost supply to contain a price rally. OPEC, Russia and other suppliers agreed to limit their production starting in January 2017 to drain a global glut.
Saudi Energy Minister Khalid Al-Falih told reporters on Sunday in Abu Dhabi that the kingdom will pare its exports by 500,000 bpd in December.
“OPEC and non-OPEC countries are committed to continuing to ensure that this balance that we fought very hard in the last two years to restore is sustained,” the group’s Secretary-General Mohammad Barkindo said in an interview in Abu Dhabi that underscored Al Mazrouei’s remarks. “The volatility is not in the interest of anyone, neither producers nor consumers nor the industry.”