C o m m e n t a r y
On the right track
After several months of historical decisions and unwavering
dedication by OPEC Ministers and their non-OPEC counter-
parts to the ‘Declaration of Cooperation’, participants once
again showed the world their mettle at their recent ministe-
rial meetings in Vienna, continuing to lead global efforts to
stabilize the world’s oil market.
The main outcome of the 172
Meeting of the Conference
and the 2
OPEC and non-OPEC Producing Countries’
Ministerial Meeting, which took place at the OPEC headquar-
ters on May 25, 2017, was an extension of production adjust-
ments for a further period of nine months, with effect from
July 1, 2017. The decision once again underscored OPEC’s
importance as a positive force in the market, alongside par-
ticipating non-OPEC countries, to the benefit of all produc-
ers, consumers, the industry and the global economy.
The conclusion was reached after considering various in-
ternal reports, as well as the recommendations made by the
Joint Ministerial Monitoring Committee (JMMC), supported
by the Joint Technical Committee (JTC).
These two bodies had been set up last year to monitor
conformity to the original production adjustments made by
13 OPEC and 11 non-OPEC producing nations, which result-
ed from the 171
OPEC Ministerial Conference on November
30, 2016, and the unprecedented OPEC and non-OPEC
‘Declaration of Cooperation’ on December 10, 2016.
The very high level of commitment on behalf of OPEC
Members and participating non-OPEC nations has been re-
flected in the unprecedented conformity levels to last year’s
adjustment decision, which has increased month-on-month
during 2017. In May 2017, the combined conformity level
reached 106 per cent, an increase of four percentage points
over the previous month.
What could be a clearer demonstration of the power and
efficacy of dialogue and cooperation?
There have evidently been many sceptics throughout this
process of consultations and negotiations, many fromobserv-
ers who did not believe that OPEC Members could find unity
among themselves. There were also many who were doubt-
ful that any kind of unanimity could be found with non-OPEC
producers. And there were also many who believed that the
‘Declaration of Cooperation’ would not be fulfilled. The devel-
opments of thepast sixmonths have surelyproven themwrong.
In fact, the actions of the Organization and its Member
Countries constitutewhat couldbe called ‘vintageOPEC’. They
have shown the courage, diligence and spirit of compromise
that have always been hallmarks of the Organization — and
the world today continues to look to OPEC to carry on with
its good work.
It is worth underscoring the fact that the ‘Declaration of
Cooperation’ is unparalleled in the history of the oil industry.
However, given the nature and severity of the downturn of
the last several years, such a concerted, collective effort was
required. No one could have acted alone — and the continu-
ation of such a broad commitment has been necessary to en-
sure that the desired objectives are kept in focus and finally
Although the rebalancing of the market has taken longer
than originally envisaged at the end of 2016, the expecta-
tions are that we are well on our way to a return to more de-
sirable market conditions. Still, all participating countries
must ensure that they continue to carry on as they have
been and maintain their commitments and conformity to
It has been evident that the slower than expected rebal-
ancing process in the first half of this year has been due to
the regular early year seasonal changes that can soften the
market, as well as to a sudden pick-up in US tight oil pro-
duction. But despite this and other sources of uncertainty
in recent months, we believe the groundwork has been laid
for stronger stabilization and a more consolidated recovery
during the second half of the year.
In short, we are still in the midst of a broad rebalancing
process and, consequently, there are still important issues
which need to be addressed. We are not entirely out of the
woods, and the market environment remains a challenging
one for producers and investors.
In addition, the discussions and consultations undertaken
over the past year have opened up an exciting new chapter
in our Organization’s interactions and relations with other
market stakeholders — non-OPEC nations, shale oil produc-
ers, financial actors, consumers and the broader international
Such a spirit of dialogue among energy stakeholders may
have important, long-lasting reverberations. It may even
serve to help protect the market from severe price cycles in
Another outcome of this entire process has been an up-
surge in optimism among oil majors and national oil compa-
nies, despite the lingering short-termmarket challenges. This
has been demonstrated by an increase in recent E&P agree-
ments and deals and a rise in investments following two years
of decline. Ingenuity, innovation and investments are vital to
the long-term future of this vital global industry.
All things said, we believe we remain on the right path.
The enthusiasm and commitment shown by OPEC and par-
ticipating non-OPEC oil producing countries in the rebalanc-
ing process is a good omen for the future of the market and
global economic stability.