I would like to begin by thanking the Algerian Government and His Excellency Noureddine Boutarfa, Algeria’s Minister of Energy, for organizing today’s meeting and the Ministerial of the International Energy Forum. The facilities, the organization, the hospitality, have all been world class.
I feel it is also appropriate to personally welcome His Excellency Noureddine Boutarfa who is attending a meeting of OPEC Ministers for the first time. Your Excellency, in the short period you have been Minister of Energy, you have certainly hit the ground running. Your prominent role in the shuttle diplomacy that has taken place over the last few weeks has been extremely welcome. You have made an enormous contribution in working to make this meeting a success.
I had the privilege of hosting His Excellency Noureddine Boutarfa, as well as His Excellency Mohammad Sanusi Barkindo, OPEC Secretary General, in Doha earlier this month. The meetings we had were extremely open and productive as we discussed the outlook for the oil market, and considered ways that oil producers might respond to the ongoing and future challenges facing the industry.
As OPEC Conference President, I would also like to offer a warm welcome to His Excellency Etienne Dieudonné Ngoubou, Gabon’s Minister of Petroleum and Hydrocarbons, and His Excellency Jabbar Ali Hussein Al-Luiebi, Iraq’s Minister of Oil, who are attending a meeting of OPEC Ministers for the first time.
I know everyone here has played an active role in the discussions leading up to this meeting. I would like to thank you all. The efforts to build a consensus have been exemplary, and I very much hope that the constructive, accommodating and encouraging nature of our recent talks carries on today.
I cannot emphasize enough how important it is for us, our Member Countries, OPEC as an Organization, and the oil market, to leave this meeting with a plausible and convincing message. One that shows that OPEC fully understands the current market situation, and is making every effort to deliver the ‘sustainable market stability’ we all desire.
In this regard, I feel it is important to recall that throughout OPEC’s history the Organization has faced numerous challenges. It has been able to overcome these through cooperation and compromise. Through my talks with you all, I feel that there is the same commitment to ensure that we find solutions to come through the current challenges we all face.
The last time we all met together was at the OPEC Ministerial Conference in Vienna back in June this year.
On 2nd June when we convened, the OPEC Reference Basket stood at just over $45 a barrel. In the period since it has gone both above and below this level. However, thus far in September it has been below $45 a barrel, and today stands in the low 40s. In the meantime, volatility and speculation have remained prevalent in the market.
With regard to global economic growth, the story was somewhat inconsistent and changeable back in June and it remains so today. Our global growth estimate for 2016 has fallen from 3.1 per cent in June to 2.9 per cent today, although for 2017, this is expected to increase to 3.1 per cent.
On the supply side, in June it was anticipated that non-OPEC supply would decline by 740,000 barrels a day in 2016. In the interim, the expected decline has lessened to a contraction of 600,000 barrels a day. Moreover, we also now anticipate non-OPEC supply to grow by 200,000 barrels a day in 2017, against a decline of 100,000 barrels a day when this estimate was first announced in July.
For demand, there has been little change. It remains robust. Global demand is currently anticipated to expand by 1.2 million barrels a day this year, the same level as expected in June. We estimate a similar level of demand growth in 2017.
And from the perspective of stocks, OECD and non-OECD inventories are still very high. In fact, OECD commercial oil stocks are currently little different to the numbers we saw presented in June, at around 340 million barrels above their five-year average.
What this underscores is that there are many uncertainties and the pace of the market readjustment is taking longer than expected. Back in June, the prospects suggested that the market would rebalance by the end of this year or in the first half of 2017. However, there are now serious questions being asked regarding this timeframe, with many agencies and analysts pushing the rebalancing further into the future.
The market has changed since June and our expectations about the rebalancing process have shifted. It is evident that there is now a greater degree of urgency about ensuring the market returns to balance as quickly as possible.
The last few weeks have seen much talk about how this could be best achieved. I believe there is a common understanding that we need to look at market stabilization measures aimed at reducing the length of the downturn and lessening volatility.
We just need to find an understanding on what measures we can take at this meeting to make it a success, and which will then hopefully lead to a future agreement.
Thank you for your attention.
Now check the slides presented by OPEC Secretary General