Baku, Azerbaijan, Feb.15
By Leman Zeynalova – Trend:
The concerted efforts by both OPEC and non-OPEC producers to support the oil prices are already having a positive impact on the market, said OPEC Secretary General Mohammed Sanusi Barkindo.
He made the remarks Feb.15 at the 7th IEA-IEF-OPEC Symposium on Energy Outlooks in Riyadh, Saudi Arabia, said the message on the cartel’s website.
“We see the onset of a more bullish sentiment emerging in the market,” added the secretary general.
Barkindo recalled that since last year’s meeting of this Symposium, the market has continued to recover from the price crash that occurred in mid-2014, when prices plummet by a stunning 80 percent.
“The effects of this dramatic event sent shock waves throughout the oil and gas industry, and indeed the global economy,” he said. “Thousands upon thousands of jobs were lost, budgets were slashed, projects were cancelled or deferred, investments were frozen or discontinued, and some companies went into bankruptcy.”
Global spending on exploration and production dropped by around 26 percent in 2015, and decreased by an additional 22 percent in 2016, said OPEC secretary general, adding that altogether, this amounts to more than $300 billion in lost investment.
“This is a worrisome scenario when you consider that a massive $10 trillion in oil-related investments is estimated to be required in the period to 2040 in order to meet future world energy demand,” noted Barkindo.
He believes that in today’s oil market, the industry would find it challenging to meet this level of investment.
OPEC secretary general pointed out that oil prices have reversed their downward trend with the cartel’s reference basket recovering to the highest levels since July 2015 to stand above $50 per barrel.
“Crude futures have rallied sharply to their highest levels in 18 months, and money mangers’ bets on prices have reached new highs, providing an additional boost to ongoing gains in prices,” added Barkindo.
During a meeting in Vienna, Austria, on Nov. 30, 2016, OPEC members decided to implement a new production target of 32.5 million barrels per day. Later, non-OPEC countries agreed to cut the output by 558,000 barrels per day during the meeting held Dec. 10, 2016.
Eleven non-OPEC countries – Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan – agreed to reduce the oil output.
OPEC and non-OPEC countries pledged to start implementing the deal from Jan. 1, 2017 for six months, extendable for another six months.
It was also decided to establish a High-level Monitoring Committee, consisting of oil ministers, and assisted by the OPEC Secretariat, to monitor the implementation of the agreement.
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