OPEC and allied oil producers can draft a strategy in June to end global output cuts if the market is no longer oversupplied by then, the UAE’s energy minister said.
Kuwait’s oil minister said the cuts may end before 2019 if the market is re-balanced by June.
The global agreement to limit production is making progress in re-balancing supply and demand for oil, though some excess inventories remain and more work is needed to remove them, United Arab Emirates Energy Minister Suhail Al Mazrouei told reporters on Monday at the Bloomberg Invest Abu Dhabi conference.
Signs of growth in demand are a positive surprise, and an increase in US shale output will be “moderate” next year, he said.
“We will meet in June, and hopefully the market will be in a much better condition for us to come and announce an exit strategy,” Al Mazrouei said at the event in the UAE capital.
Ministers of the Organization of Petroleum Exporting Countries plan to meet in June to assess the market and consider halting the cuts, which they agreed last month to extend until the end of next year in a drive to drain a glut and prop up prices. Brent crude has gained 12 percent since Jan. 1, when the cuts accord took effect, and the benchmark grade was 2 cents higher in London trading at $63.42 a barrel at 7:46am local time.
“We are optimistic that the market will recover next year as a result of cuts and increasing demand,” while the global economy is expanding, he said. Increased investment in the industry is important, Al Mazrouei said.
OPEC and friendly producers including Russia may end their cuts before 2019 if the crude market is back in balance by June, Kuwait’s Oil Minister Issam Almarzooq said Sunday in Kuwait City. Russia is keen to end the output-capping deal as early as possible, he said.
“We still have a full year left in the agreement, but there is a possibility that we exit the cuts agreement before 2019 if the market is re-balanced by June,” Almarzooq said. “There is pressure from Russia to exit the deal as soon as possible” once the market is balanced, he said.
Iraq’s Oil Minister Jabbar al-Luaibi said it was “too early to speculate” on what OPEC and its partners in the curbs will decide in June.
“It depends on the market,” al-Luaibi said on Sunday in Kuwait. “We have an entire year ahead of us. OPEC made a decision to monitor the market, and now it’s studying the market. The developments in the market will be the factor that contributes to decisions.”
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