VIENNA, April 13, (AFP): OPEC warned Wednesday that the world remains awash with crude ahead of a crunch meeting in Doha between cartel members and other major producers to discuss a production freeze to boost the oil price.
The Organization of the Petroleum Exporting Countries said in its April monthly report that oil prices rose more than 20 percent in March, continuing a slow recovery from the great plunge of 2014-15.
“Positive market sentiments continue to arise from the output freeze plan being considered by major crude exporters,” as well as an expected fall in output in the United States and elsewhere, OPEC said.
“Nevertheless, hurdles prevail as oversupply persists and inventories remain high,” it warned.
All oil producers, not just those in the 13-nation OPEC but also non-cartel members like Russia, have suffered from the more than 60-percent drop in oil prices since mid-2014.
An agreement in Doha on Sunday to freeze production would, in theory at least, reduce the glut, boost prices and help repair their in some cases — for example Venezuela — dangerously tattered public finances.
“When there is coordination between major producers in OPEC and non-OPEC countries, it will certainly help to stabilise prices,” Kuwait’s acting oil minister Anas al-Saleh told reporters on Sunday.
Media reports on Tuesday suggested that Russia and Saudi Arabia, two of the world’s biggest producers, had already reached a deal, boosting oil prices to a high for the year. These fell back slightly on Wednesday.
What would be a momentous agreement among the 15 or so oil producers — representing some 75 percent of global output — in Doha is far from guaranteed, however. Nor would it necessarily lift prices.
OPEC member Iran has so far rejected attempts to freeze production as it ramps up output following the lifting of sanctions this year as part of 2015’s nuclear deal with major powers.
Saudi Arabia’s deputy crown prince Mohamed bin Salman has said the kingdom, OPEC’s top producer, would only freeze output if Iran and other major producers are also on board.
The OPEC report showed that Iranian oil production in March was 3.3 million barrels per day (bpd), up from 2.9 million bpd in January and an average of 2.8 million bpd in 2015.
Saudi oil production by contrast was 10.1 million bpd, unchanged from January or from the kingdom’s average last year.
OPEC on Wednesday also trimmed slightly its forecast for global oil demand this year to 94.18 million bpd from its previous projection of 94.23 million bpd, reflecting slowed economic momentum in Latin America. In 2015 demand was 92.98 million bpd.
On the supply side, OPEC kept to its projection that non-OPEC output in 2016 would be 56.39 million bpd, down from 57.13 million bpd in 2015, a slightly bigger contraction than previously forecast.
The main reason was lower expectations for crude oil production from China’s onshore mature fields and further declines in the United States, where shale oil producers have proved surprisingly resilient to the lower oil price.
As usual, OPEC gave no forecast for its own output this year, saying only that its members pumped in March 32.25 million bpd, based on secondary sources, up from an average of 31.85 million bpd in 2015.
Saudi oil minister Ali al-Naimi appeared to rule out cutting his country’s oil production in remarks published Wednesday, days ahead of a producers’ meeting aimed at propping up crude prices.
Asked about the kingdom’s position on reducing output, Naimi said: “Forget about this topic,” Al-Hayat daily reported on its website, without elaborating.
“Oil prices are always volatile,” he said.
Members of the oil-exporting cartel OPEC and non-OPEC producers will meet Sunday in Doha to discuss freezing production at January levels.
Iran has said it will not join a freeze as it is still ramping up production following the lifting of nuclear-linked sanctions in January.