*Osama Suleiman from Vienna
The Organization of Petroleum Exporting Countries (OPEC) said, "The declaration of cooperation between producers continues in to make a radical shift on the global oil industry." It pointed out that the participating countries in the Declaration proved that they work in the framework of concerted efforts. It also confirms again and again the dedication to accelerate the rebalancing of the markets.
According to a recent report by the International Organization, a wide range of stakeholders in the energy market including producers and consumers as well as the global economy has witnessed the outstanding performance of producers in the joint cooperation agreement.
The report pointed out the importance of the next meeting of the Five-Member Ministerial Committee on monitoring and follow-up of the reduction of production agreement, which would be held in Jeddah in April. It expected to reveal more positive data and statistics that support the process of joint cooperation of producers and accelerate the restoration of balance in the oil market.
A statement issued by the Ministry of Energy, Industry and Mineral Resources stated, "The OPEC ministerial oversight committee will meet in Jeddah, Saudi Arabia, on April 20." The committee is charged with monitoring the implementation of an agreement with non-OPEC producers, led by Russia, to cut crude production by 1.8 million bpd by the end of this year.
The report noted that OPEC countries and independents in the joint agreement set a new record of compliance in February, with voluntary production adjustments continuing, thus achieving a level of 138 percent, according to data from the Joint Ministerial Monitoring Committee.
Last month witnessed a good advance in the market's rapid rebalancing track in recent months, with OECD trade inventories dropping by 852.5 million, leading to further reductions in global oil stocks.
The report finds that in view of the success of the Declaration on Cooperation among Producers, the Ministerial Committee called upon the observer States to observe the Declaration of the States participating in the Declaration to consider further opportunities to institutionalize their mutual cooperation. It noted the need for all participating countries to achieve or exceed the level of full conformity with voluntary production adjustments.
The report quoted Khalid Al Falih, the Minister of Energy, Industry and Mineral Resources, as he was saying that realism and design are the only ways to achieve a safer and sustainable orderly transition in the future of energy. He emphasized that there is a tremendous opportunity for cooperation between international energy organizations to promote a rational vision of future energy policy that serves energy security, which promotes environmental protection, mitigates the challenges of climate change, and helps promote economic prosperity not only in the developed world but also in the developing world.
The report praised the success of the visit of OPEC Secretary-General, Mohamed Barkindo, last week to Azerbaijan and his meeting with President, Ilham Aliyev, the Minister of Industry and Energy Parviz Shahbazov and senior officials. It pointed out that this visit has seen many great discussions, especially with regard to the file of Azerbaijan's ongoing cooperation with OPEC, and its active participation in the historic "Declaration of Cooperation". The visit also explored possible ways to strengthen cooperation in the future.
In the report, according to Barkindo, President Aliyev played a constructive and very important role both in ensuring the success of the "Declaration of Cooperation" and its continuous implementation with high efficiency He pointed out that Azerbaijan has always been one of the countries with the highest performance in terms of voluntary amendments for productions that always exceed 100 percent.
The discussion between OPEC and Azerbaijan also resulted in prospects for future cooperation between the two sides, and the international organization's appreciation for Azerbaijan's strong support in the ongoing efforts to further strengthen and institutionalize the framework of cooperation between producers.
About the results of Barkindo's recent visit to Venezuela and Ecuador, the first suffers a sharp decline in production while the second is less enthusiastic about the continuation of production cuts. The report pointed out that building a broader framework for permanent cooperation between producers is a vital means to maintain market stability, especially in the short term.
The report showed that the promotion of mutual interests between all parties to the industry would not be achieved without continuing the constructive dialogue. Barkindo stressed the importance of the commitment of all participating countries, including Venezuela and Ecuador to achieve full compatibility with the amendments to the offer under the Declaration of Cooperation.
Barkindo was keen to communicate well with Eng. Carlos Perez, the hydrocarbon minister at Ecuador, and discussed the latest developments in the market. Ecuador agreed with the amendments to the offer and explored ways to further enhance joint cooperation.
The Russian Minister of Energy, Alexander Novak, stressed the importance of transparent exchange of analyzes and forecasts of the world energy market. He noted that there is no real chance for any country in the world to succeed in implementing energy policy without sufficient understanding of the main trends and factors influencing markets. He was considering the analysis of these matters is necessary.
He pointed to the need for cooperation of all the producing and consuming countries to create an environment in which it is possible to predict energy policies and investment decisions in a way that ensures market position and prevents any sudden crises.
The report stressed the importance of adopting a comprehensive comparative analysis of the future energy market conditions and expectations. It noted the pivotal role played by the World Energy Agency and Forum, which for more than 20 years has been a key platform for studies and analyzes of developments and changes in the world energy market.
On the other hand, oil prices rose at the end of last week to the highest level since late January after the Minister of Energy and Industry, Khalid al-Falih, said, "OPEC and its allied producers will need to maintain supply cuts in 2019."
Leonid Fedon, the vice president of Lukoil, believes Russia and OPEC will have to extend oil production cuts until 2020 if the US supplies continue to increase. He added that the company, Russia's second largest oil producer, would support Saudi Arabia's idea of extending oil cuts until 2019.
According to "Reuters", Global Brent futures jumped to $ 1.54, 2.2 percent, to settle at $ 70.45 a barrel, ending the week with gains of about 6.4 per cent, the biggest weekly gain since July.
US benchmark WTI also recorded the biggest week of gains since July, rising 5.5 percent after ending the session at $ 65.88 a barrel, up $ 1.58 or 2.5 percent.
Al-Falih's statements led the futures prices of the two leading benchmarks to rise. He pointed out that it requires that the member states of OPEC to coordinate with Russia and other non-members of the Organization with regard to supply restrictions in 2019 to reduce global oil stocks.
In January 2017, OPEC and a group of non-member countries, led by Russia, began implementing an agreement for production cuts of 1.8 million bpd to eliminate the excess of supply.
Oil is supported by expectations of rising global demand despite an increase in US crude production. Morgan Stanley expects Brent to reach $ 75 a barrel in the third quarter as the seasonal demand increases. US energy companies added oil rigs for the second week in a row as oil prices hovered near a three-year high, which prompts exploration firms to increase spending plans for the current year.
"Drilling companies added four oil excavators in the week ending March 23, bringing the total number of active excavators to 804," Baker Hughes Energy Services said in its closely monitored weekly report.
The total number of active excavators in America, a preliminary indicator of future production, is much higher than a year ago that is about 652 diggers. The energy companies continued to increase spending since mid-2016 when crude prices began to recover from a two-year slump.
Since the beginning of the year, the total number of active oil and natural gas rigs in the United States has reached 964 diggers on average, compared to an average of 876 diggers in 2017, and 509 excavators in 2016 and 978 diggers in 2015. Most of the excavators produce both oil and gas.
Earlier this month, the US Energy Information Administration forecast that total US oil production would rise to a record 10.7 million bpd in 2018, and 11.3 million bpd in 2019, from 9.3 million bpd in 2017.
