Opec and non-Opec producers should cut production to balance the global oil market before a supply glut becomes unmanageable “like a cancer”, Qatar’s former Deputy Prime Minister and Minister of Energy and Industry HE Abdullah bin Hamad al-Attiyah has said.
Al-Attiyah, influential in Opec as Qatar’s Energy Minister from 1992 to 2011, said a deal announced in Doha last week by Saudi Arabia and Russia to freeze production at January levels was not enough to balance the market as an oversupply continues to grow.
“If they want to balance the market the solution will be easy. Don’t go slow. If you do, then every time the market will create a glut. Cut 2.5mn barrels and then you will balance the market in a few years,” al-Attiyah, who says he is talking to producers in and outside of Opec, told Reuters.
“I will ask every producer, do you want quantity or price? They say they want a reasonable price but to reach that there has to be sacrifice. If you do not sacrifice the other will not sacrifice,” he, currently chairman of Abdullah bin Hamad al-Attiyah Foundation for Energy & Sustainable Development, said in an interview in Doha on Monday.
“The oversupply has grown from 1.7mn bpd to 3mn bpd today. I am very worried about oversupply. It is like a cancer. If you did not deal with it quickly, it would spread.”
Oil has slid around 70% from more than $100 a barrel in mid-2014, pressured by excess supply and a decision by the Organization of the Petroleum Exporting Countries to abandon its traditional role of cutting production alone to boost prices.
Al-Attiyah spoke before Saudi Oil Minister Ali al-Naimi said on Tuesday he was confident more nations would join a pact to freeze output at existing levels in talks expected next month, but effectively ruled out production cuts by major crude producers anytime soon.
Addressing the annual IHS CERAWeek conference in Houston, al-Naimi told energy executives that growing support for the freeze and stronger demand should over time ease the glut that has pushed oil prices to their lowest levels in more than a decade.
Traders have been sceptical about whether freezing production near record levels will support the market.
Al-Attiyah, a leading architect of Qatar’s rise to global prominence as gas exporter, said Opec would not cut production alone but added that Saudi Arabia, the world’s largest oil exporter, was willing to cooperate with other producers to balance the market.
“Saudi Arabia needs a commitment from everyone. The Saudis will be big supporters—but others have to join in,” he said. “Opec will never do it alone. No way Opec will do it alone: 100%.”
One stumbling block in attempts to forge a wider agreement is Iran, which is increasing output following the lifting of Western sanctions in January and whose oil minister was quoted on Tuesday as calling the output freeze deal “laughable.”
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