Oil supply figures for December show OPEC and its allies “look much better on a monthly basis,” OPEC Secretary General Mohammed Barkindo said on Wednesday.
Barkindo added that these figures show that the member countries of the Organization of Petroleum Exporting Countries (OPEC), “have been able to stick together and overcome these market challenges that have become almost routine.”
The Secretary General was speaking at the 10th Gulf Intelligence UAE Energy Forum 2020 held at NYU Abu Dhabi.
On the topic of rising geopolitical tensions in the oil-rich Middle East region, Barkindo said, “We remain confident that our leaders in this region are currently doing everything possible to restore normalcy, and to arrest the situation before it spirals out of control.”
“I respectfully ask all world leaders to rally around and support the leaders in this region who have embarked on these initiatives to restore normalcy,” he added.
Tensions in the Middle East have skyrocketed following the assassination of Iranian Qassem Soleimani, a commander in the Islamic Revolutionary Guards Corps (IRGC) – Quds Force, by a US drone strike on Friday. Iran has since responded to the death of Soleimani, launching more than a dozen ballistic missiles against US military and coalition forces in Iraq in the early hours of Wednesday morning.
With Iraq facing a significant amount of instability due to recent events, Barkindo noted that, “It’s a big relief that the facilities continue to be secure in Iraq, their production is continuing unaffected.”
On how OPEC will respond to the ongoing situation, Barkindo said that, “We in OPEC [since founding]… have faced several challenges including wars … each time we tried to insulate ourselves from geopolitics and depoliticize this beautiful resource, oil. I believe we will continue to do this.”
OPEC has managed to keep world markets relatively stable, between $50 and $75 a barrel, for the past three years through a deal with non-OPEC countries including Russia, Kazakhstan, Oman and Mexico.
Barkindo believes that the lower spike in oil prices due to rising geopolitical tensions than might have happened historically is due in part to OPEC’s role in stabilizing the market. “This framework is working, and participants are continually showing their commitment, [we saw] 146 percent compliance [on production cuts] in 2019 by all the parties together. I think this has to a large degree reassured the markets,” he said.
OPEC has managed to keep world markets relatively stable, between $50 and $75 a barrel, for the past three years through a supply cut deal with non-OPEC allies including Russia, Kazakhstan, Oman and Mexico.
The decision to extend and deepen these supply cuts in December was “the savior of the market,” Barkindo said, adding that OPEC sees the market’s reaction as comfortable with the group’s decision.