Opec and its allies have achieved record levels of compliance in curbing oil production, dragging down an inventory glut that had resulted in a price slump, oil ministers of Saudi Arabia and the UAE told a ministerial gathering of the group’s monitoring committee in Jeddah.
“We’re continuing to do well in meeting our production targets", said Saudi oil minister Khalid Al Falih. Opec later released a statement saying it and participating non-Opec countries had achieved "a conformity level of 149 per cent with their voluntary production adjustments, the highest level so far".
Al Falih said: “Over the past 15 months, OECD inventories, stocks, which are the most credible and visible, have steadily declined from the highs, before the downturn started.”
OECD inventory levels, an indicator of global oil market supply, saw crude stocks reduced by 300 million barrels from their peak of 3.12 billion barrels in 2017, he added.
The inventory levels stood at around 2.8bn barrels, just over the 2.6bn that was seen in the markets before the price slump that saw the price of Brent, the benchmark for light, sweet crude, fall from $100 a barrel in 2014 to around half that level the following year. Opec and producers outside the group, led by Russia, have been taking 1.8 million barrels per day out of circulation since the beginning of 2017 in a bid to bolster prices and rebalance the market.
Brent has since seen a resurgence, climbing to a three-year high of $74 per barrel on Thursday as political tensions in the Middle East and lower reported stocks of US shale, pushed prices higher.
The Saudi oil minister urged producers at the gathering to iron out uneven compliance to production targets, which he said led to “a sense of lack of fairness” and urged Opec and members outside their group to step up on a “more sustainable basis”.
He also warned against complacency. Opec is expected to announce later today a basic framework to strengthen a long-term alliance or “supergroup” between Saudi Arabia, the world’s largest oil exporter, and Russia, the biggest sovereign producer outside of the group.
“Demand is uncertain and new supply is coming at a faster pace. We have seen that in North America in particular,” Al Falih told reporters.
The group will agree targets in June to further reduce inventory levels.
Opec did not work towards a targeted price level, he added saying that the current upswings in price and resulting excess supply threatened the market.
“This volatility is our enemy and we’re trying to defeat it and mitigate it,” said Al Falih.
His comments come amid rumours that Saudi Arabia would work towards pushing the price of Brent to $80 or even $100 per barrel.
Opec was working towards “market stability”, said Suhail Al Mazrouei, the UAE’s energy minister and current Opec president, observing that the group had more work to do to rebalance supply and demand.