EMEA News
Libyan, Nigerian Output Along With Cutback Extension Downplayed in OPEC Meeting
Although they deferred any talk of an output cutback extension, participants in the Organization of the Petroleum Exporting Countries (OPEC) spent much of their ballyhooed meeting in Vienna on Friday praising themselves for winning the battle to reduce the global crude glut - while Russia warned that the cartel and non-members must work on a longer-term oil strategy.
The loose consensus during the meeting was that the cartel's success in clearing the glut (with OECD oil inventories falling to 3 billion barrels in August and crude in floating storage falling since June), discussions about whether to extend their cutbacks beyond March of 2018 could be postponed until January.
But Alexander Kovak, energy minister for Russia, stressed that all parties must work closely together well into 2018: "We need not only to keep up the pace but continue our coordinated joint actions in full, but also work out a strategy for the future, to which we will stick starting from April 2018."
Both OPEC and Russia estimate they're about halfway toward clearing the glut, and Issam Almarzooq, oil minister for Kuwait, said, "The process is working fine so far; we hope that we can consume the remaining overhang in this period."
Production caps for Libya and Nigeria were discussed, but not finalized at Friday's meeting; and while Emmanuel Kachikwu, oil minister for the latter country, seemed amenable to cutting production, he fell short of expressing wholehearted support, instead stating that he would impose a cap when Nigeria achieves consistent production of 1.8 million barrels per day.
He told Bloomberg, "We're not looking at a time period, we're looking at the message," adding that if an output extension is needed, "we will definitely collectively support that extension."
What's remarkable about Friday's meeting is not that discussion of an extension was deferred, but that Libya and Nigeria seemed to be a minor talking point, even though analysts spent most of the summer insisting that both countries pose a major threat to market rebalance and that bringing them into the cutback deal is vital if OPEC is to achieve any success moving into 2018.
For example, earlier this month Bjarne Schieldrop, chief commodities analyst at SEB AB, said that the ferocious production pace of both countries, as well as U.S. shale, means "there will be plenty of oil in 2018 with the need for OPEC to hold cuts through all of next year."
