UAE joins gathering consensus to extend oil cut


CAIROOPEC and allied oil producers should extend their production cuts beyond March to help re-balance the market, the United Arab Emirates (UAE) said, adding weight to a gathering consensus for longer reductions in output among participants in the global accord.

The UAE favours maintaining the cuts, which are set to expire at the end of the first quarter, Minister of Energy Suhail Al Mazrouei said. The fourth-largest member of the OPEC staked out its position a day after OPEC secretary general Mohammad Barkindo said that caps on output are the “only viable option” to restore stability to the market.

“Definitely there’s a need for extension,” Mazrouei said on Tuesday at an energy conference in Abu Dhabi.

Output cuts by OPEC and other producers such as Russia and Oman have started to pay off, with benchmark Brent crude trading close to a two-year high. OPEC will meet in Vienna on Nov 30 to review the pact on cuts, which took effect in January, and possibly extend it. Russia, Saudi Arabia and Iraq already signalled they would be open to extending the curbs.

Oman, a member of the producer committee monitoring the cuts, wants to prolong them beyond March and sees producers extending them until the end of 2018, Oil Minister Mohammed Al Rumhy told reporters on Monday in Abu Dhabi. The largest Arab oil producer outside OPEC doesn’t want to delay a decision to extend the limits and supports a Saudi proposal to prolong them at the producers’ meeting this month, he said.

However, OPEC has yet to convince Russia of the need to reach an agreement at the Vienna meeting to extend their cuts. Russia still believes it’s too early to announce anything this month, two people with knowledge of matter said. Another issue is the duration of an extension, with options including an additional three months of cuts being considered.

Mazrouei said on Monday that coordinated cuts by OPEC and suppliers outside the group have helped trim crude inventories from record storage levels. “I am optimistic about the whole of 2018”, which will be a “recovery year” for oil markets, he said.

Brent, which has gained 8% this year, was trading 68 cents lower at US$61.53 (RM256.58) a barrel in London at 7:24am local time yesterday.

“We are seeing clear indications that the market is re-balancing at an accelerating pace and stability is steadily returning,” OPEC’s Barkindo said on Monday. “I am certain that if we had not mobilised ourselves when we did, building consensus and jointly taking action in responding to the crisis, the industry would be in worse condition than it is today.” — Bloomberg