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It is still too early to say if the oil supply deal should be extended beyond its original six-month period at the end of the first half this year, the oil minister of the United Arab Emirates (UAE) said on Wednesday.
After OPEC and 11 non-OPEC producers decided to cut supply by almost 1.8 million bpd to prop up prices and speed up the oil market rebalancing, Suhail bin Mohammed al-Mazroui, the oil minister of OPEC’s no.4 largest producer, said that the oil market needs competition, Reuters reports, quoting the minister as speaking at an oil industry conference.
“We are not a cartel. We are not targeting a price,” Mazroui said, as quoted by Reuters.
According to the minister, oil prices at US$50 would be fair for some producers and unfair for others.
Regarding the thorny issue of compliance to the supply deal, and asked if oil producers would continue to honor the agreement if oil prices increased, the UAE minister said that they were not doing it “purely for the price”, but also for “the sustainability of the industry”.
Under the OPEC deal from November 30, UAE pledged to cut 139,000 bpd from a reference production level of 3.013 million bpd, and its Abu Dhabi National Oil Company (ADNOC) signaled as early as in mid-December that it would comply with the cuts.
Producers including Saudi Arabia, Kuwait, UAE, Qatar and Oman are complying with the cuts, Kuwait’s OPEC governor Nawal Al-Fezaia told Bloomberg earlier this week. Kuwait is chairing a monitoring committee on the cuts implementation.
Referring to a possible extension of the deal, Al-Fezaia said to Bloomberg: “Extension of the current deal or additional cuts depends on conditions in the oil market, the recovery of prices and reduction of the oversupply.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.