Oil output increase was not discussed at Sunday’s joint OPEC-Non-OPEC ministerial monitoring committee, despite U.S. President Donald Trump calling for OPEC to lower oil prices via Twitter.
According to Iranian energy news website Shana, Iran’s OPEC Governor Hussein Kazempour Ardebily who represented Iran in Algiers, said the member countries present in the meeting emphasized 100 percent compliance to the previously announced OPEC-Non-OPEC agreement production cut agreement.
Ahead of the OPEC- NON-OPEC meetings in Algiers over the weekend, Trump on Thursday called for OPEC to boost production.
He said: “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!”
We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!
— Donald J. Trump (@realDonaldTrump) September 20, 2018
However, it seems that OPEC/non-OPEC members were not moved by the tweets, as Khalid A. Al-Falih, Saudi Arabia’s Minister of Energy, Industry and Mineral Resources; and Chairman of the Joint Ministerial Monitoring Committee (JMMC), tasked to monitor members’ compliance with keeping production at a certain level, said oil supply-demand balances remain satisfactory.
He also expects the oil demand to grow: “When it comes to oil demand, we see fairly healthy growth in the proximity of 1.5 million barrels per day on average this year, and the next. This is quite encouraging but must be seen with caution in light of the lingering concerns over global trade and tariff issues and currency crises in some developing economies, and their potential implications for the global economy.
“While inventories have been fluctuating due to shorter-term factors, the broader inventory trend remains reassuring with both US and OECD inventories falling to their five-year average range.”
“Investment is also flowing back into the industry, as increased market stability inspires greater confidence in the petroleum sector. Given the time horizons of such expenditures, renewed investment activity is a vote of confidence in the industry’s long-term prospects.
“And when it comes to the functioning of our joint efforts, the OPEC and Non-OPEC cooperation has remained strong, which has without a doubt played a key role in creating market stability.”
Back in late 2016, OPEC, led by Saudi Arabia, and several Russia-led non-OPEC oil producers signed a deal to voluntary reduce production by 1.8 million barrels per day to bring oil prices up from historic lows caused by the hike in the U.S. shale oil production. The members in June agreed to ease some of the cuts as the conformity had reached more than 100%, meaning they’d cut more than originally pledged.
The committee on Sunday noted that countries participating in the agreement achieved a conformity level of 129% in August 2018, and 109% in July 2018, progressing towards the decisions of the 174th Meeting of the OPEC Conference convened in June to adjust overall conformity to 100%.
Worth noting, Al-Falih over the weekend said that despite the satisfactory supply-demand balance the members continued to closely monitor the supply and demand “and will respond appropriately and in a timely manner, as necessary.”
These words might be very important in the coming months, as the U.S. sanctions are expected to strike Iran’s oil output in November, with the aim of reducing its oil exports.
As previously reported, following Trump’s may announcement that he would be reimposing the sanctions on Iran, Al-Falih tweeted: “Following the US withdrawal from #IranDeal , I would like to confirm our commitment to oil market stability for the benefit of producers & consumers, #Saudi will work closely with major OPEC, non-OPEC producers & with key consumers to mitigate the effects of any supply shortages.”
The move was not welcomed by Iran. Speaking to Bloomberg ahead of the OPEC/Non-Opec meeting which he didn’t attend, Iran’s oil minister Bijan Zanganeh said two OPEC members were @seeking to damage the group (OPEC) and carry out “anti-Iranian policies” at the behest of the U.S.
While he didn’t name the countries, Bloomberg has speculated those might be Saudi Arabia and the United Arab Emirates “the staunchest backers of the U.S. within OPEC and are aligned politically against Iran in the Middle East.”
Brent crude futures LCOc1 rose to the highest level since May at $80.43 per barrel, and were up $1.57, or 2 percent, at $80.37 per barrel at 0642 GMT on Monday morning, Reuters has reported.