PRICES TAKES SOME TIME
Saudi Oil Minister Ali al-Naimi said crude prices will rise and foresees that market forces and cooperation among producing nations will lead in time to renewed stability.
"I am optimistic about the future, the return of stability to the global oil markets, the improvement of prices and the cooperation among the major producing countries," al-Naimi said. "Market forces as well as the cooperation among producing nations always lead to the restoration of stability. This, however, takes some time.
Al-Naimi declined to comment when asked how the removal of economic sanctions against Iran might affect crude prices. Iran, freed of curbs on its oil exports, plans to boost shipments by 1 million barrels a day this year.
Led by Saudi Arabia, the Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world's oil, abandoned limits on output on Dec. 4 amid efforts to squeeze higher-cost producers such as Russia and U.S. shale drillers out of the market. The decision contributed to a global glut and led to a further drop in prices. Saudi Arabia produced 10.25 million barrels a day in December, up 750,000 barrels a day from the end of last year, according to data compiled by Bloomberg.
Brent crude rose as much as 64 cents, or 2.2 percent, on Monday and was trading at $29.04 a barrel on the London-based ICE Futures Europe exchange at 12:27 p.m. local time. The benchmark grade has dropped 22 percent this year after tumbling 35 percent in 2015.
OPEC forecast a steeper decline this year in supplies from outside the group as lower prices affect producers in the U.S. and Canada. Non-OPEC output will drop by 660,000 barrels a day, the group said Monday in its monthly market report, deepening the decrease from its previous estimate by 270,000 barrels a day.
OPEC is oversupplying markets by some 600,000 barrels a day, according to the report. This is "the year when the re-balancing process starts," it said. The report made no reference to the lifting of sanctions on Iran's oil exports.
The world's producers must reduce output by 5 percent to 10 percent to stabilize prices, and Oman is ready to make such a cut if other suppliers do the same, the country's Oil Minister Mohammed Al-Rumhy said Monday at a conference in Abu Dhabi. Oman, the largest Arab oil producer that's not a member of OPEC, isn't alarmed about a future increase in Iranian production, he said.
"We've already been hit by the tsunami," Al-Rumhy said. "We're not worried about the little wave that comes after."
Saudi Arabia, the world's biggest crude exporter, together with non-OPEC producer Mexico have "an especially important role to play," al-Naimi said Sunday in Riyadh at an event with the Mexican president and energy minister. When oil prices plummeted in 1998, Mexico cooperated with the Saudis and other suppliers to restore market stability and boost prices, he said.
Saudi Arabia will sign an agreement on Sunday to cooperate with Mexico in the oil industry, with provisions for exchanging experts, setting up joint ventures and encouraging mutual investments, al-Naimi said.
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