Saudi Arabian energy minister Khalid al-Falih. Picture: REUTERS/RAMZI BOUDINA
Saudi Arabian energy minister Khalid al-Falih. Picture: REUTERS/RAMZI BOUDINA

Abu Dhabi — Oil cartel Opec and allied oil producers will cut or adjust production as needed to balance the market, the group’s president, United Arab Emirates energy minister Suhail al-Mazrouei, said on Wednesday.

If the so-called Opec-plus needs to reduce output, it will do so, he said in a Bloomberg TV interview in Abu Dhabi. The producers will take whatever steps are necessary to keep the market stable and keep crude inventory levels where they are, al-Mazrouei said. Oil production is above expectations, and Opec-plus needs to change its strategy, he said.

“We have cut in the past to reach the market balance, and if we need to cut production to keep the market balanced, we will. The group will reach consensus on whatever is required to adjust the market.”

Oil has barely recovered from a record 12-day decline as investors fled a market battered by swelling supplies and a darkening demand outlook. Futures in New York were 0.8% higher at 7.33am local time after plunging 7.1% in the previous session in the biggest one-day drop in more than three years.

Crude inventories in industrialised nations have increased for four consecutive months and are set to jump by 2-million barrels per day (bpd) in the first half of 2019 if current output is maintained, the International Energy Agency (IEA) said on Wednesday in its monthly report.

Opec, in a report on Tuesday, said it sees demand for its own crude falling faster than expected next year as a slowing global economy crimps demand and rival supplies surge.

Unjustified sell-off

Oil market fundamentals “are still reasonable” and don’t justify the sell-off on Tuesday, al-Mazrouei said. Opec-plus isn’t targeting a price but is seeking instead to keep crude inventories in line with their five-year average, he said. Opec plans to gather next month in Vienna to assess the market.

“In December, when we meet, if there’s a requirement to curtail, whatever the required cut, we will cut in accordance with what we agree on,” al-Mazrouei said. “Whatever price we end up with, the market will decide the price, not us.”

Opec’s biggest producer, Saudi Arabia, has expressed the need for oil producers to cut 1-million bpd, reversing a June decision to boost supply to contain a price rally. Opec, Russia and other suppliers agreed to limit their production starting in January 2017 to drain a global glut.

Saudi energy minister Khalid al-Falih told reporters on Sunday in Abu Dhabi that the kingdom will pare its exports by 500,000 bpd  in December.

“Opec and non-Opec countries are committed to continuing to ensure this balance, that we fought very hard in the last two years to restore, is sustained,” the group’s secretary-general Mohammad Barkindo said in an interview in Abu Dhabi, which underscored al-Mazrouei’s remarks. “Volatility is not in the interest of anyone, neither producers nor consumers, nor the industry.”