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27 Apr 2017

OPEC Secretary General speaks at International Oil Summit in Paris

OPEC Secretary General, HE Mohammad Sanusi Barkindo, was today joined by HE Dr. Sun Xiansheng, the Secretary General of the International Energy Forum (IEF) and Mr. Keisuke Sadamori, the Director of the Energy Markets and Security Division at the International Energy Agency (IEA), on a panel session at the 18th International Oil Summit in Paris.  The session was moderated by Mr. Claude Mandil, a former Executive Director of the IEA.

The OPEC Secretary General initially recalled the atmosphere witnessed at last year’s International Oil Summit, on 21 April 2016, with the prevalent feeling gloomy and the outlook downbeat, and compared the more positive impression from participants at this year’s event.

He also provided an overview of the oil market situation since the landmark 170th (Extraordinary) Meeting of the OPEC Conference in Algiers, on 28 September 2016, and the historic voluntary production adjustment decisions taken by OPEC at the 171st Ordinary Meeting of the OPEC Conference on 30 November 2016 and the ‘Declaration of Cooperation’ with 11 non-OPEC nations on 10 December 2016.

He stressed that following these decisions, “it was evident that market sentiment significantly improved” and this positivity further advanced in the early part of 2017 “following the high-level of conformity to the voluntary production adjustments seen in January (86%).”  It was a period of “lower volatility, and more stability in oil prices”, he said.

Nevertheless, despite the expectation of improved levels of conformity in February, which proved to be true, with overall conformity at 94%, he noted that the market “saw a turn in sentiment in early March” with financial players reducing their net-long positions.  He added that this was not totally unexpected “as the first quarter of every year has a number of seasonal trends that can soften the market.”

The Secretary General noted, however, that positive sentiment has returned, with further improved OPEC and non-OPEC conformity of 98% in March, and signs that the market rebalancing is taking place.  Total OECD commercial oil stocks fell by 23 million barrels (mb) from February to March, and the latest five-year average reduced from 314 mb to 275 mb over the same period.  Moreover, industry numbers state that crude in floating storage has fallen by over 40 mb since the beginning of the year.

He said it was important to appreciate that “the market rebalancing was never going to occur in a linear fashion”, but “slowly, steadily, and surely we are seeing light at the end of the tunnel.”

HE Dr. Sun and Mr. Sadamori also presented perspectives on the oil market outlook. The IEF Secretary General provided a comparison of supply and demand over the period 2014-2016, underscoring both certainties and uncertainties, as well as some of the challenges facing the industry in 2017.

Mr. Sadamori highlighted the IEA’s short-, medium- and long-term outlooks.  In the near-term he noted the fact that global oil inventories have started to draw after the coordinated voluntary production adjustments from OPEC and some non-OPEC nations.  And in the long-term, he highlighted the fact that the IEA does not see an oil demand peak for the foreseeable future, a point also underscored by HE Barkindo.

Other speakers at the event included: HE Eng. José Maria Botelho de Vasconcelos, Minister of Petroleum, Angola; HE Jabbar Ali Hussein Al-Luiebi, Minister of Oil, Iraq; Amin H. Nasser, President and Chief Executive Officer (CEO) Saudi Aramco; Abdelmoumen Ould Kaddour, CEO, Sonatrach; Mustafa A. Sanalla, Chairman, Libya’s National Oil Corporation; and Patrick Pouyanné, Chairman of the Board and CEO, Total.

The International Oil Summit is an annual gathering of oil industry policymakers and leaders focused on enabling the exchange of views on ways and means to address a large spectrum of oil related issues, such as securing investment and meeting future oil demand, policy developments, addressing oil market volatility and improving dialogue among producing and consuming countries.