The level of conformity to the Declaration of Cooperation by Organisation of Petroleum Exporting Countries (OPEC) and Non-OPEC has hit over 130 percent, Mohammad Sanusi Barkindo, OPEC secretary general has said.
Speaking at the 22nd International Exhibition & Conference, “Oil & Gas Uzbekistan (OGU)”, Barkindo said the achievements and impact of the implementation of the ‘Declaration of Cooperation’ has contributed to the stabilization of the market.
The deal between the Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia to cut supplies and erase a global glut has helped oil prices reach $78 a barrel, their highest level since 2014.
Barkindo said in terms of the short-term impact on the growing stock overhang, the achievements have been significant, with the collective efforts of the producers involved continuing to yield positive results.
OECD commercial stock levels have been adjusted from a peak of 3.12 billion barrels in July 2016 to 2.83 billion barrels in March 2018, corresponding to a drop of 300 million barrels, and the stock overhang has been reduced by 400 million barrels.
In his words, “we are seeing robust demand growth, which is forecast at around 1.65 mb/d in 2018. This, in turn, is supported by a healthy global economic outlook, with GDP growth expected at around 3.8 per cent for this year.
“We also witnessed prices rebound from a low of below $30/b in January 2016 to recently reach the highest levels we have seen since November 2014.
“These are excellent indicators of the effectiveness of our shared efforts in the wake of the market downturn of a few years ago,” he said.
Worried about the long term sustainability of the success, Barkindo said timely and adequate investments are the only guarantee needed.
He said, “Although many recent conversations and exchanges among stakeholders have focused on short-cycle investments, what is most needed is steady, long-cycle investments, which represent the global base load.
“It’s worth recalling that our industry is very capital-intensive and technology-driven. Complex by nature, it requires significant up-front investments.
“But even after such financial resources have been secured, the industry is susceptible to myriad challenges, both regional and global,” he added.