The progress made by a group of major producers from OPEC and outside the organization towards cutting oil output by a combined 1.8 million b/d will be assessed next week at a meeting in Vienna, the UAE energy minister said Thursday.
“We will meet in Vienna next week to look at and evaluate those commitments, and put together an action plan,” Suhail al-Mazrouei told delegates at the Atlantic Council Global Energy Forum in Abu Dhabi.
Mazrouei said international oil prices had this month made “a fair movement towards a correction,” and were on the right trajectory to balance the market.
“But the real correction will happen when we see some action from the concerned group who came together,” he said, referring to a December meeting between OPEC members and certain other major international producers including Russia and Oman.
“I personally have lots of trust in the commitment of those countries,” he said. “There’s definitely a sincereness.”
As a major producer, the UAE would be comfortable with an oil price that would convince petroleum-sector investors to return to the market, Mazrouei said.
“We’re not there yet,” he added.
The UAE minister said OPEC was not going to be cutting output alone, and that was only fair.
He said a natural decline in global output was already underway, predicting it would make itself felt within the next two years due to a large drop in investment in oil exploration and development.
He reiterated an opinion expressed Wednesday that it was too early to say whether OPEC’s late November agreement to cut output by 1.2 million b/d in H1 2017 should be renewed after six months, as it was important to evaluate the reaction of US shale producers to the planned cuts.
“I tend to believe that the market can and should balance itself in six months to at least equilibrium,” he added, noting, however, that the market was apt to prove such prognostications wrong.
During the same conference panel session, Total CEO Patrick Pouyanne said it was important for the concerned producer group to stay the course on cuts for as long as two years.
“I think what has been done by OPEC and non-OPEC thanks to dialog … is very important, but it has to be implemented, not only for six months to a year, but for two years,” he said. “We also know our US shale [producer] friends are reinvesting again, which will add another uncertainty to the market.”