All options are on the table, including a deeper cut from OPEC and its allies in December, OPEC Secretary General Mohammad Barkindo said on Thursday, as the OPEC+ coalition tries to rebalance the market amid floundering economies.
"The conference will take appropriate, strong, positive decisions that will set us on the path of heightened and sustained stability for 2020," OPEC's chief said at a news briefing in London, where he was a keynote speaker at the Oil & Money Conference.
Asked about whether OPEC and allies could decide at their meeting in early December to deepen the cuts in the production cut pact currently expiring in March 2020, Barkindo said "All options are open."
"As we approach December, we will be faced with real data for 2020 which will enable us to probably review the current arrangement and come up with a decision that probably will cover the whole of the year," Barkindo said, as carried by Reuters.
The comments from OPEC's chief came on the same day in which the organization revised down, yet again, its world oil demand growth estimate for 2019 to just below 1 million bpd, citing slowing economic growth momentum amid the ongoing trade disputes.
OPEC, the International Energy Agency (IEA), and the U.S. Energy Information Administration (EIA), as well as many other organizations and analysts have trimmed their oil demand growth estimates several times this year already, on the back of signs of slowing economic growth in the world, also due to the U.S.-China trade spat.
Earlier this week, the EIA revised down its oil price forecast by $5 a barrel, due to expected increase in global oil inventories in early 2020. In its Short-Term Energy Outlook (STEO) for October, EIA acknowledged there is a higher level of oil supply disruption risk than previously assumed, due to the attacks on Saudi oil infrastructure in mid-September. Yet, EIA says, those risks are more than offset by "increasing uncertainty about economic and oil demand growth in the coming quarters, resulting in a lowered oil price forecast."
By Tsvetana Paraskova for Oilprice.com
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Comments
The disease is the glut in the global oil market and the cause of the disease is the trade war between the United States and China. The war has augmented a glut that ranged from 1.0-1.5 million barrels a day (mbd) before the war to an estimated 4.0-5.0 mbd.
An end of the trade war will automatically lead to a deep reduction of the glut and this will enhance global demand for oil and therefore prices.
The fundamentals of the global economy are still positive. Any signs of slowing economic growth in the world are exclusively due to the trade war.
My advice to OPEC+ is keep its nerve and not to indulge in any new production cuttings.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London