Oil exporters agreed to cut output by 1.2 millions barrels a-day in November
UAE Energy Minister Suhail al-Mazroui has denied that Opecs production cut of 1.2 million barrels a-day (b/d) for first six months of 2017 was to manipulate price.
Fixing the market for a price, is not a strategy that everyone supports in Opec. Fixing the price is not going to work, because youre not alone in the market. If you fix the price through curtailment, someone will increase the production and they will beat you and you will end up cutting. What helps is a healthy competition, said Al-Mazroui at the Gulf Intelligence UAE Energy Forum in Abu Dhabi on 11 January.
Opec members agreed in November 2016 agreed to lower production, with non-Opec members also expected to slash production by 558,000 b/d.
Kuwait, Saudi Arabia as well as non-Opec Oman have already announced compliance with cuts in January.
Opec had in 2014 adopted a policy of non-intervention in oil markets when prices plunged nearly 40 per cent from $100 levels seen earlier in the year.
The decision to cut in 2016 was motivated by the need to ensure that investment levels in the energy industry did not suffer further decline, added Al-Mazroui.
If we were just doing it for the price, I would tell you that we would have waited six months, then you have a huge level of production that is leaving the market because you cannot sustain it, he said.
This cut is to help the market stabilise. It is not about curtailment of production to help the market achieve a certain price. Some of the investors were discouraged to invest at the level of $50. People are not talking about this, how many jobs have been lost in services - 500,000 jobs, thats a lot, he added.
Al-Mazroui also denied that Opec producers had a specific price targeted for 2017.
I would never quote the price, because I truly dont believe that we should target the price, because if we target the price, then we are a cartel and we are not a cartel, he said.
You might also like...
McDermott completes financial restructuring exercise
28 March 2024
Region heads for hotel boom
28 March 2024
Lowest bidders emerge for Kuwait housing project
28 March 2024
Redcon wins Red Sea Triple Bay infrastructure deal
28 March 2024
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.