Saudi Minister ‘Enthusiastic’ About Oil Demand: OPEC+ Update
Saudi Arabia has committed to deeper cuts than its cap requires in an effort to drain stockpiles.
(Bloomberg) -- Saudi Arabia’s energy minister was confident about the outlook for oil demand after OPEC’s partner ratified the group’s decision to keep cutting production.
At a meeting in Vienna, members of the Organization of Petroleum Exporting Countries and all its allies in the OPEC+ coalition settled on maintaining quotas for another nine months. The rollover of curbs into a fourth year shows producers are ever more bogged down in a struggle to wrest control of the market from the booming U.S. shale industry.
Al-Falih ‘Enthusiastic’ About Oil Demand (1:23 p.m. CET)
Saudi Arabian Energy Minister Khalid Al-Falih is “enthusiastic about where oil demand is going,” he said in the Austrian capital after the OPEC+ meeting. Russian Energy Minister Alexander Novak later said the G-20 summit in Osaka last week made it easier to assess oil demand growth and gave hope there would be no more trade restrictions.
The OPEC+ group will discuss “a collection” of different metrics to calculate global oil inventories when some ministers meet in September, Al-Falih said. Russia, the other leader in the alliance, supports extending the number of metrics, Novak said. He, however, wants more discussions on one of the proposed criteria, which will take average inventories from 2010 to 2014. This method should consider subsequent rise in global demand, Novak said.
OPEC Statute Supersedes OPEC+ Charter (1:03 p.m. CET)
The charter of cooperation signed by OPEC and its allies is not supreme to the cartel’s existing statute, Secretary-General Mohammad Barkindo said. The new agreement is not a treaty, but it will last for “eternity,” he said.
OPEC is also more optimistic about the oil market than other forecasters and doesn’t anticipate a global recession, Barkindo said.
OPEC+ Agrees on Nine-Month Extension (12:13 p.m. CET)
All OPEC+ countries endorsed the deal reached Monday, Al-Falih said. The kingdom itself has committed to deeper cuts than its cap requires in an effort to drain stockpiles.
An OPEC+ panel found that inventories in industrialized countries were about 25 million barrels above the five-year average in May, according to Al-Falih. The group is now considering a new measure for stockpiles using the 2010-2014 average, which would put the surplus at 240 million barrels, he said.
OPEC+ Ministers Sign Cooperation Charter (11:44 a.m. CET)
OPEC+ ministers have been signing a charter for long-term cooperation during the opening session of Tuesday’s meeting, said delegates. The document was drafted on Monday by OPEC ministers and approved by the group after some changes to resolve objections from Iran. It creates a platform for regular discussions, said Russian Energy Minister Alexander Novak.
Iran Says Deeper Cuts May Be Needed (10:51 a.m. CET)
Iran’s Oil Minister Bijan Namdar Zanganeh suggested Tuesday that OPEC+ may need to make deeper oil-output cuts than the current 1.2 million barrels a day at some point as it continues to lose market share to U.S. shale.
Iran itself -- subject to American sanctions -- is working “day and night” to find ways to export its crude, Zanganeh said in a Bloomberg Television interview in Vienna.
Ministers Confident of Deal (10:14 a.m. CET)
OPEC ministers arriving for talks with their non-OPEC allies are universally confident that they will finalize a nine-month extension to production cuts. Saudi Energy Minister Khalid Al-Falih is “absolutely” sure that non-members including Russia will ratify the accord, while his counterpart from the United Arab Emirates Suhail Al Mazrouei told reporters he is “very confident.” Mustafa Sanalla, chairman of Libya’s National Oil Co., is sure there will be a deal.
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--With assistance from Javier Blas, Grant Smith, Dina Khrennikova, Fred Pals, Julian Lee and Salma El Wardany.
To contact the reporters on this story: Annmarie Hordern in London at ahordern1@bloomberg.net;Nayla Razzouk in Dubai at nrazzouk2@bloomberg.net;Golnar Motevalli in Tehran at gmotevalli@bloomberg.net
To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Rakteem Katakey, Christopher Sell
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