OPEC’s conformity to voluntary production cut reaches 116%
The conformity level of members of the Organisation of the Petroleum Exporting Countries (OPEC), and non-OPEC in respect to voluntary production adjustments was 116 per cent in the month of August.
OPEC Secretary General, Mohammad Sanusi Barkindo, who made the disclosure at the 33rd Asia Pacific Petroleum Conference in Singapore, said the conformity levels among the 24 participating countries in relation to their voluntary production adjustments have been remarkably high.
Nigeria was shielded from output freeze due to the instability in the country’s crude oil production. Barkindo added that compliance levels have sent a clear message to the world that these countries are determined to do what is necessary to bring back sustainable market stability.
He said there is decline in the Organisation for Economic Co-operation and Development (OECD) commercial crude inventories, which went down to 170 million barrels above the five-year average in August from 340 million barrels at the beginning of the year.
Crude in floating storage was also down by an estimated 40 million barrels since the start of the year, with the support of a narrowing contango, and even signs of backwardation in relation to ICE Brent in Europe.
Barkindo stated: “These positive developments are good news, not only for our Member Countries, and other non-OPEC producers, but indeed this is equally good news for consumers who rely every day on oil and products to fuel their growing economies.
“Nowhere is this more relevant than in Asia, which is expected to be the engine for future world energy growth due to its expanding economies, rapid population growth, a rising middle class as well as the swift transition to urbanisation and industrialisation.
“We expect global demand to increase by nearly 16 million barrels a day until 2040 – at which time it could reach around 111 million barrels a day.”
He said there is a need to rebalance and stablise the oil market so that industry investment can return to sufficient levels necessary to secure future supply.
Speaking on Nigeria’s exemption from output cut, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, noted that although Nigeria’s production recovery efforts had made some appreciable progress from October, 2016, it was not yet “out of the woods”.
Kachikwu said: “Nigeria as one of the older members of OPEC will continue to work for the good of the organisation and its member countries, respecting whatever agreements and resolutions are collectively made.
“Nigeria will be prepared to cap its crude oil production when it has stabilised at 1.9 million barrels per day,” he said.