Consensus is building towards agreement to extend an Opec deal to limit output by three to six months as the producer group seeks to achieve its goal of bring down inventory stocks, Saudi Arabia’s oil minister Khalid al-Falih said.
“Consensus is building, but it is not done yet,” he told reporters on the sidelines of an industry event in Abu Dhabi on Thursday. “We are still in consultations.”
His comments reflect growing intent within the group to extend a deal which saw Opec countries and those outside of the cartel such as Russia agree to cut their output by around 1.8m barrels a day in the first six months of 2017.
Essam al-Marzouq, Kuwait’s oil minister, said he expected Opec to extend the deal noting increasing compliance from Opec and non-Opec members.
The deal among some of the world’s biggest producers to curb supply aims to reduce excess stockpiles that have persisted since the oil downturn got underway in 2014.
But the pact has yet to meet its main goal of bringing inventories back into balance, which would therefore likely persuade the producer group to extend the six-month deal by another three to six months, Mr Falih said earlier at a televised discussion among the six Arab Gulf oil ministers on Sky News Arabia.
“Our targets is the level of inventories as an indicator of the success of our initiative,” he said.
“So we will watch (inventories in) April and May and our colleagues will be keen to take the right measures in this regard.”
Mr Falih said preliminary agreement to extend the deal had been reached by most – but not all – producers.
Although oil prices have risen above $50 a barrel since the first collective agreement since 2001 took effect, there are concerns among market participants about whether the cuts alone are enough to rebalance supply and demand.
US inventories remain high and US shale oil output is rebounding as oil prices tick higher.
Opec’s oil ministers are due to meet for their next formal meeting in Vienna in May where they will debate whether to extend the existing agreement through the second half of this year.
Opec Secretary-General Mohammad Barkindo said in Abu Dhabi on Wednesday that the current strategy had put the oil market “on the path of recovery”.
He said all oil producers taking part in a supply-cut agreement are committed to reducing global inventories to the sector’s five year average levels. “Our collective action will continue to prove effective,” he said.
Addiational reporting from Anjli Raval and Ed Crooks