Ex-OPEC official says world needs 1.5 mbpd output cut

Oil&Gas Materials 1 February 2016 16:41 (UTC +04:00)

Baku, Azerbaijan, Feb. 1

By Dalga Khatinoglu - Trend:

Last year, producers pumped over 1.84 million barrels per day (mbpd) of crude oil more than the market demand, causing a huge glut and pushing prices to the lowest level in the last 12 years, Parviz Mina, a former member of OPEC's Long-Term Strategy Committee, told Trend Feb. 1.

He said it seems that the major producers agree to decrease production level by five percent, but this level is not enough.

Mina added that global oil demand may increase in 2016, while some producers decrease the output.

Recalling that Iran is preparing to add 500,000 barrels per day of crude to production level this year, he said global producers should decrease oil output by at least 1.5 mbpd to meaningfully support prices.

According to the International Energy Agency (IEA), the global oil production reached 96.31 mbpd, while demand was 94.47 mbpd in 2015.

The global oil surplus will persist at least until late 2016 as demand growth slows and OPEC shows "renewed determination" to maximize output, read an IEA report, released Dec. 11, 2015.

The WTI oil cost was $34, while Brent reached $35.25 on Feb. 1.

Alexander Novak, Russian energy minister, said Jan. 28 that the planned OPEC meeting in February with representatives of other oil-producing countries could discuss reduction of oil production by each producer country by five percent, but a general agreement is needed for that.

"Approximately these parameters were voiced - to cut the production for each country by five percent," Novak told reporters responding to a question about whether Saudi Arabia offered Russia to cut production by five percent.

The latest OPEC monthly report, released Jan. 18, indicates that the cartel has decreased oil production by 210,000 barrels per day in December, month-to-month to 32.182 mbpd.

In 2016, the demand for OPEC crude is forecasted at 31.6 mbpd, some 1.7 mbpd higher than the previous year.

OPEC will hold an ordinary meeting June 2.