LONDON: OPEC and its partners will take the current "economic bearishness” into account when they meet in coming weeks, and are committed to keeping oil markets balanced this year and beyond, its top official said.
The organization will be "unyielding” in its efforts to reduce oil inventories back to normal levels and revive investment in the industry, taking an approach that is "agile” and "flexible,” OPEC Secretary-General Mohammad Barkindo said in remarks delivered via video link at a conference hosted by RBC Capital Markets in New York.
"There has also been a significant change in market sentiment, in both equity and financial markets” that has worsened many institutions’ outlook for oil demand growth, Barkindo said.
"This will all play into our calculations in the upcoming ministerial meetings.”
Oil prices this week slipped below $60 a barrel in London for the first time since January on concerns that escalating trade wars will hurt a global economy that’s already showing signs of strain.
While there are significant supply disruptions in Iran, Russia and Venezuela, markets are also having to absorb a flood of shale oil from the U.S.
The 24-nation coalition of oil producers drawn from the Organization of Petroleum Exporting Countries and beyond, which includes major producers like Russia, has been keeping supply restrained since the start of the year to prevent the formation of a surplus.
Despite their efforts, prices have faltered, with U.S. futures poised to enter a bear market.
The alliance, known as OPEC+, is due to gather in Vienna in the next few weeks to decide whether to prolong supply curbs into the second half of the year.
While Saudi Arabia, OPEC’s biggest member, has recommended sticking with the strategy, there’s been less clear support from Russia.
"I think there will be stronger signals from Saudi Arabia that they will be aggressive to balance the market,’’ said Helima Croft, chief commodities strategist at RBC.
‘’I think the Saudis are very concerned about price.’’
Russia’s most powerful oil executive, Rosneft PJSC Chief Executive Officer Igor Sechin, said on Tuesday that the OPEC+ cuts mean the country is ceding its share of the world oil market to expanding producers in the U.S.
Nonetheless, Barkindo said that all nations in the pact are unwavering. They have been working on a charter to put this ad-hoc alliance on a more permanent footing.
"All countries remain resolute in continuing to deliver on this commitment for the remainder of 2019 and beyond,” Barkindo said. - Bloomberg