OPEC, Russia and other oil producers participating in output cuts have beaten market expectations in meeting their commitments, according to United Arab Emirates Energy Minister Suhail Al Mazrouei.
The 24 countries that agreed to cut 1.8 million barrels of output a day beginning last year are committed to balancing the market, Al Mazrouei, who is also president of the Organization of Petroleum Exporting Countries, said Tuesday in Abu Dhabi. “I am optimistic that this year we will achieve market balance,” he said.
Producers in January pared more supply than they pledged, achieving a record 133 percent implementation of the cuts that took effect at the start of 2017, OPEC said last week. Goldman Sachs Group Inc. recently raised its short-term crude oil price forecast and said the market is likely already balanced. OPEC and allied suppliers agreed in November to extend their cuts until the end of this year in an effort to clear a global glut.
“We started with lots of doubts” about the success of the strategy, Al Mazrouei said. “This is the first time that OPEC works with Russia, for example, and some other countries, and I think we achieved as a group more than expectations.”
Trillions of dollars in investments will be needed to keep up with oil demand, which is expected to grow this year by at least the amount as in 2017, Al Mazrouei said. Countries in the Gulf Cooperation Council such as OPEC members Saudi Arabia, Kuwait and the U.A.E. are backing projects to increase production capacity, but “it’s not enough that only the GCC countries are investing and continuing to invest in this important sector,” he said.