Market has capacity to absorb higher oil prices: Saudi minister
JEDDAH, April 21, (Agencies): The State of Kuwait has been committed to cutting oil production so as to restore balance at global markets, Kuwaiti Minister of Oil, Electricity and Water Bakheet Al- Rashidi said on Friday.
The minister made the statement to KUNA after he had led Kuwait’s delegation participating in the eighth meeting of the Joint OPECNon- OPEC Ministerial Monitoring Committee (JMMC) hosted by the Saudi city of Jeddah.
OPEC and non-OPEC oil producers’ commitment to the output cut deal reached 145 percent, said the minister, adding that it has been the highest rate since the deal was put in effect in January 2017.
All countries taking part in the meeting have announced their continued abidance by working to restore balance at the global oil markets, he pointed out. He commended efforts by OPEC and non-OPEC oil producers in making recovery at markets.
Meanwhile, the ministerial committee affirmed in its report that the level of commercial reserves of Organisation for Economic Co-operation and Development (OECD) countries dropped from 3.12 billion barrels in July 2017 to 2.83 billion barrels, representing a decrease of 300 million in surplus.
The report noted that the surplus in reserve is still exceeding accepted levels before 2014, the period which witnessed a drop in oil prices, it added. Saudi Energy Minister Khaled al- Faleh said on Friday the global market has the capacity to absorb higher oil prices, after crude hit the highest level in more than three years. “I have not seen any impact on demand with current prices. We have seen prices significantly higher in the past — twice as much as where we are today,” Faleh told reporters ahead of an oil producers’ meeting in Jeddah, Saudi Arabia.
“Energy intensity as you know has declined significantly … this reduced energy intensity and higher productivity globally of energy input leads me to think that there is the capacity to absorb higher prices,” Faleh said. Faleh insisted the Organization of Petroleum Exporting Countries (OPEC) does not have a price target for oil.
“We never have a price target … Prices are determined by the market,” said Faleh who warned against the danger of price fluctuations, saying that “volatility is our enemy.” Speaking at the same meeting of OPEC and non-OPEC oil producers, United Arab Emirates Energy Minister Suhail al-Mazrouei said his main concern was stability.
“We don’t have a target price, our target is market stability,” Mazrouei said. OPEC producers and non-OPEC countries struck a deal in 2016 to trim production by 1.8 million barrels per day to reduce a global glut of oil. The deal, which is due to run out at the end of this year, has succeeded in boosting oil prices above $70 a barrel from below $30 a barrel in early 2016.
The recovery has also been fuelled by geopolitical tensions, US President Donald Trump’s threat to reimpose nuclear- related sanctions on Iran and production problems in Venezuela, Nigeria and Libya. Benefitting from the higher prices, US oil producers have ramped up drilling, pushing domestic output to a record 10.5 million barrels a day last week, according to data from the US Energy Information Administration.