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OPEC and Allies Probably Extend Oil Supply Curbs

OPEC+ oil producers will likely extend an agreement to limit crude supply but are unlikely to expand their cuts. Also, the United Arab Emirates is not worrying about long-term growth in oil demand.

The OPEC+ led by Russia implemented a deal to cut production by 1.2 million barrels per day until March 2020. This is to increase prices. OPEC members will meet in December to review the output policy.

The energy minister of non-OPEC Oman said extension likely deepens cuts and are unlikely unless things happen in the next couple of months. This is after an energy conference in the UAE capital Abu Dhabi.

Additionally, oil demand was progressing as trade tensions soothe. Also, the current oil prices satisfy Oman, which fell by more than 1%. This is after concerns over the prospects of a trade agreement between the U.S and China.

Rumhy said all indications show things are getting better including the fear of recession and the signs of a positive agreement between the U.S. and China.

The energy minister of the UAE, Suhail al-Mazrouei, said oil demand growth was reasonable. UAE is the third-largest producer in OPEC after Saudi Arabia and Iraq.

Moreover, geopolitical tensions in the Gulf are causing worries among oil purchasers following attacks on Saudi Arabian oil plants. The strike temporarily halted the production of the world’s top oil exporter, according to Indian Oil Minister Dharmendra Pradhan.

Washington and Riyadh blamed the familiar foe, Iran, for the Sept. 14 assault. Also, Iran is said to be responsible for the limited strikes on Saudi energy assets and tankers in Gulf waters earlier this year. Tehran denied the charges.

Tensions with Iran rose to new highs since May 2018, when the U.S. retreat from an international nuclear pact with Tehran. Also, it restores sanctions on its oil exports.

 

OPEC on Energy Security and Investment

The Omani oil minister, whose country keeps up ties with Tehran, said it takes less to engage with Iran. Also, it is hard to build up crude stocks for emergencies.

Additionally, he said the way forward is dialogue. Sitting with Iran is something they have been campaigning for a long time, hoping it will happen. This was on a panel discussion when Rumhy asked about the possibility of Gulf countries holding talks with Iran.

OPEC Secretary-General Mohammad Barkindo gave caution about underinvestment in the global oil industry. Also, he said the pace picked up from 2014-2016 when prices declined.

He added that 2017 and 2018 is only a marginal uptick in investments. Shareholders in the industry should be for the long term, not a fly-in, fly out.

OPEC said in its 2019 World Oil Outlook. It would supply a declining amount of oil in the next five years. Also, the production of U.S. shale and other opponents’ sources expanded, despite an increasing appetite for energy fed by global economic expansion.

Increasing climate activism in the West and widening the use of alternative fuels are putting the weight of long-term oil demand under more inspection.

Mazrouei said the greener forms of energy would have a higher pace of growth. Contrarily conventional oil and gas will also grow. Gas will become more as there is a demand for cleaner forms.



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