Baku, Azerbaijan — OPEC and its allies still have more cutting to do to bring their oil production levels in line with their pledged quotas, according to the latest estimates of their compliance with the agreement to curb output.
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The 24-country OPEC/non-OPEC alliance achieved 86% conformity in February with their agreed 1.2 million b/d in output cuts, a delegate told S&P Global Platts in Baku, Azerbaijan, ahead of a key monitoring committee meeting.
While an improvement on January's 83% compliance, Saudi energy minister Khalid al-Falih, who has pressured members to adhere to their quotas, told reporters that he was confident that the group's performance "will catch up very soon."
But he added that the alliance would continue to manage oil supplies with the objective of market stability, in the face of supply risks due to US sanctions on Iran and Venezuela, as well as uncertain demand from China, India and other growth economies.
"We will not allow energy security to be challenged by any event, but at the same time we will not leave investors and oil and gas companies to stay bewildered, not knowing what tomorrow is going to bring in terms of a stable environment where investments can flow to the sector," Falih said.
OPEC and 10 non-OPEC allies led by Russia agreed in December to a 1.2 million b/d production cut accord that is scheduled to run through June.
A technical committee of OPEC and non-OPEC delegates met Sunday in Baku to assess market conditions, and a six-country Joint Ministerial Monitoring Committee co-chaired by Falih and Russian counterpart Alexander Novak is scheduled to meet Monday to discuss the supply accord.
Novak, however, will not attend the meeting, as he has a scheduling conflict that requires him to be in Moscow, though he arrived in Baku Sunday afternoon to hold bilateral talks with several members of the OPEC/non-OPEC coalition.
The minister declined to speak to reporters on arrival.
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The full OPEC/non-OPEC coalition will meet April 17-18 in Vienna. Falih has said his preference as of now is to extend the cut agreement beyond June.
He has also criticized the pace of Russia's production cuts. Russia last week announced February production of 43.3 million mt, or about 11.34 million b/d, which was above its quota of 11.19 million b/d.
Novak has said the country will be in full compliance by the end of March.
OPEC's own analysis arm warned Thursday in its monthly oil market report that slowing global economic growth will hurt oil demand, while supplies from outside of OPEC were projected to rise faster than expected.
Oil inventories as of January stood at 2.88 billion barrels, about 19.1 million barrels above the five-year average that OPEC is targeting, according to the report.
OPEC Secretary General Mohammed Barkindo told reporters that the coalition is "super-focused" on drawing down inventories, though he declined to say whether the market would be balanced by the June expiry of the supply cut agreement.
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