Vienna — Oil market conditions in 2020 could be brighter than expected, which could make it unnecessary for OPEC and its allies to implement deeper output cuts when they next meet December 5-6, the organization's secretary general said Tuesday.
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Analysts have been predicting a very bearish oil market in 2020 which has put producer coalition under pressure to increase its production cuts next year to balance the market.
But Barkindo said brighter spots were emerging in the oil market as 2020 approaches.
DEEPER CUTS
When pressed on whether the coalition was considering deeper cuts, Barkindo said the group was still working through its options.
"It is currently an ongoing process... the toolkit is multifaceted. it's not just on numbers. it's not about whether to deepen the adjustment or not," he said.
"It is to take a decision that will be balanced, all inclusive, everybody should be committed and on board, that is practical, and that will be welcomed by the market."
This is slightly different from what Barkindo said a month ago when he suggested all options were on the table at the next meeting in Vienna on December 5-6.
The current OPEC/non-OPEC supply accord commits the 24-country coalition to 1.2 million b/d in production cuts through March.
"We are optimistic the market is on course to attain stability," he said. "Sustained stability going forward."
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RAMPING UP COMPLIANCE
Barkindo said he was confident that all the OPEC/non-OPEC members were committed to "ramping up their level of compliance," not ramping up production.
Compliance by countries like Nigeria, Iraq and Gabon have not been up to scratch, and Saudi Arabia has approached these countries to further their output.
OPEC, Russia and nine other non-OPEC allies are nearly three years in to collective production cuts aimed at propping up the market, but oil prices are still far below where many countries need them to be in order to balance their budgets.
Barkindo also said global economic concerns that were clouding the oil demand picture are improving.
"The news coming out is more optimistic at the moment," he said. "We have seen the biggest economy in the world, the US, continue to defy its predictions, with solid growth, jobs."
-- Eklavya Gupte, eklavya.gupte@spglobal.com
-- Herman Wang, herman.wang@spglobal.com
-- Edited by Jonathan Fox, newsdesk@spglobal.com