OPEC claims output cuts are rebalancing the international market but warned that ongoing vigilance is “critical” to long term sustainability.
The cartel’s president and Saudi Arabia’s Minister of Energy Khalid Al-Falih issued the stark reminder as representatives of the 13 member countries come together for the organisation’s 172nd meeting.
The Vienna based gathering is expected to result in an extension and possible deepening of the production cuts agreed at the end of last year.
OPEC and other major producers such as Russia, forming a collective of 21 countries in total, agreed to curb output by almost 1.8 million barrels a day for the first six months of 2017.
The move seen the global oil price briefly rally back above $50 a barrel on the thought of eliminating surplus reserves.
However a number of factors, including the ramping up of US shale projects, market skepticism, and partial failures to reach monthly targets, have dashed hopes of a quick fix return to above $60.
Also burdening the price rally is President Donald Trump’s proposal to sell off half of the US oil reserve – a move that would flood the market with cheap American oil and soil any attempt at curing the glut.
Addressing delegates at the conference, Al-Falih, said the oil market had “markedly improved” over the last six months but said OPEC and its allies had “more work to do” in lowering inventories.
He said: “At today’s meeting, we will review the developments of the past six months, as well as the market outlook for the remainder of 2017 and beyond, as we consider our posture going forward.special attention to lightening the environmental footprint of oil,
“The main focus for today remains on consolidating, strengthening and accelerating the process of rebalancing, alongside the important task of drawing down global oil inventories.
“Together with our partners among participating non-OPEC countries, we will continue to monitor the health of the oil market and the wider global economy, and examine ways to accelerate recovery and return the market to its normal condition.”
Al-Falih said the market had seen OPEC’s “unwavering resolve” and congratulated the collective countries for achieving “concrete” results.
However, he added: “Nevertheless, vigilance should be the watchword of the day, and it is critical that we do not become complacent.”
The OPEC president also vowed to engage with the United Nations Framework Convention on Climate Change in order to “lighten” the oil footprint of the industry.
He added: “Nurturing a constructive and stable market environment is our highest priority.
“This goal is important not only for us but also for consumers, as it ensures a sustainable future for oil supply and demand—the absence of which may produce seriously unwelcome outcomes such as price spikes and risks to global energy security.
“Other key objectives include strengthening cooperation between OPEC and non-OPEC producers, and fostering excellent relations with international energy institutions to promote greater understanding of vital issues.
“As we begin today’s Meeting of the Conference, the task in front of us is admittedly challenging and complex, but I’m confident that by working together we can and will accomplish our goals for the mutual benefit of all.”
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