The oil market did not respond well to OPEC’s decision to cut 1.2mn barrels per day (bpd) of oil from its output, instead continuing a steep decline to $53 per barrel of Brent crude by 31 December.Â
However, the energy minister of the UAE, Suhail al-Mazrouei, appears optimistic about the attaining market balance. He tweeted out on 1 January that is “optimistic” about achieving market balance in the first quarter of the year.Â
As we start a new year, I remain optimistic toward achieving the market balance during the 1st quarter after OPEC and Non-OPEC production cut. At this time last year we remember the same pessimistic views which we disagreed with and as we expected 2018 was a good year
— سهيل المزروعي (@HESuhail) January 1, 2019
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Russia’s energy minister, Alexander Novak, said after OPEC’s decision to cut production that the organisation and its allies should avoid any rash reactions to oil price fluctuations and should continue to monitor the market until early 2019.
Al Mazrouei said in December that “deeper cuts” would be considered if the planned 1.2mn bpd reduction was not sufficient to restore balance to the market. Algeria’s energy minister, Mustapha Guitouni, recently noted that while he was confident that oil prices would rise about $65 per barrel in the first quarter of 2019, “if the situation requires a further reduction, we will do it.”Â
OPEC plans to meet in April to reassess its position. The group made several shifts in strategy in 2018 while attempting to balance supply and demand–first capping production, then opening the taps to fill a supply gap and finally cutting production as the market appears oversupplied.
