United Arab Emirate energy minister says OPEC's success is such that there is a sentiment of others wanting to join "the clan." File Image / Pixabay
Once more, the Organization of the Petroleum Exporting Countries (OPEC) on Thursday took to the stage to trumpet its success in maintaining its cutback strategy, this time using as its mouthpiece its new president, the United Arab Emirates.
Suhail Mohamed Faraj al-Mazrouei, energy minister for the UAE, told CNBC at the 9th Gulf Intelligence UAE Energy Forum in Abu Dhabi that "there is of course a positive market sentiment that we are seeing today, and it is expected....the market is balancing and this is what we've been saying: the issue was the timing and how long it would take."
As for OPEC, al-Mazrouei credited the cartel "for staying together; the compliance level is what is important to me......we achieved 122 percent together, and I am confident of the commitment of all the countries attending."
Suhail Mohamed Faraj al-Mazrouei, energy minister, UAE
There is a dynamic of joining the clan
He added that given the number of observers at the last OPEC meeting in which it was decided to extend the production cutbacks, "there is a dynamic of joining the clan" - although he did not elaborate and there is no palpable sign from other non-OPEC countries that they are about to hop on the cutback bandwagon.
Looking ahead, al-Mazrouei said, "My expectation is that this compliance will continue very strong for the full year; I have no doubt the market needs further correction - we still have more than 100 million barrels...that needs to be taken care of......I am expecting that we will still see corrections in 2018 and I think it's the year of ... the market fully achieving the balance."
The optimistic energy minister even hinted that an alliance between OPEC and non-OPEC producers, including Russia, could continue once the cutback deal expires at the end of this year: "I am expecting that this group of countries that stood and have become responsible for helping the market to correct, (that) there is a very good chance they could stick together and put a shape around that alliance."
Up until recently, the UAE was one of several OPEC cheaters who repeatedly failed to adhere to the cartel's production cuts - something it rationalized by claiming it used a higher baseline for its cuts than the one stipulated in the formal agreement.