Remarks by OPEC Secretary General

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the 5th Meeting of the Joint Ministerial Monitoring Committee (JMMC), 22 September 2017, Vienna, Austria.

Mr. Chairman, Excellencies, distinguished delegates,

It is always a great pleasure to welcome you back to the OPEC Secretariat.  I would like to thank you all, both OPEC and non-OPEC delegations alike, for taking the time to attend this 5th Meeting of the Joint Ministerial Monitoring Committee (JMMC) today, the first in the Hijrah 1439 and on the first Friday of this blessed year! Your continuous engagement towards fulfilling the objectives of this Committee is essential in order to achieve the full and timely implementation of the decisions taken last year and realise our noble objectives of restoring stability in this beleaguered industry.

I would like to single out and commend our Chairman, HE Issam A. Almarzooq, Minister of Oil and Minister of Electricity and Water of Kuwait, and Alternate Chairman, HE Alexander Novak, Minister of Energy of the Russian Federation, for their continued exemplary leadership of the JMMC since its inception at the beginning of the year. Despite the inevitable teething problems that accompany any innovation, the process has been smooth: so far, so good!

The heavy load and tireless work of the Joint Technical Committee, which met for the eighth time two days ago at the OPEC Secretariat in Vienna, should be acknowledged. You remain the technical power house of the JMMC.

In that regard, I would like to particularly extend my deep appreciation to the two Co-Chairs of the JTC, Haitham Al-Ghais and Pavel Sorokin, for their exceptional dedication, commitment and selfless stewardship. The JMMC and the JTC are key pillars of the implementation of the historic Declaration of Cooperation and, as I remarked at dinner last night, have become the umbilical cord connecting the 24 participating countries.

Mr. Chairman, Excellencies, distinguished delegates,

It seems almost unbelievable that we are about to move into the fourth quarter of 2017, so quickly has this year passed.  We have every reason to be pleased with the steady progress we have made in our collective efforts to overcome the challenges of the current oil market cycle – which is worse than all previous cycles.

  • We have seen oil storage tanks being massively drained, both onshore and offshore, across all regions of the world. For the first time in the course of this cycle, storage levels above the five year industry average have plunged below 200mb/d from a record 380mb/d last year, which now stands at 170mb above the five year average. In terms of days of forward cover we are at just about 2 days above the five year average. Of this 170mb, 137mb constitute crude and a mere 33mb are products. Furthermore, 112mb of the 170mb originate from the US. These figures confirm beyond all reasonable doubt that the market is rebalancing.
  • Our conformity levels have continued to significantly improve and reached an unprecedented level of 116% in August! In terms of our core principles of equity, fairness and transparency, could we have achieved all these remarkable feats without the over-performance of some participating countries? No! We therefore acknowledge with deep appreciation the exemplary conduct and leadership of over-conforming OPEC countries, Saudi Arabia, Angola and Equatorial Guinea, as well as over-conforming non-OPEC participating countries, Azerbaijan, Brunei and Sudan, in continuously restraining themselves and sacrificing in the interest of all. In this regard, we urge participating countries to achieve 100% conformity without further delay. Had every participating country conformed fully since the beginning of the Declaration of Cooperation, the market would have already rebalanced.
  • Demand growth remains robust, with the projected 2mb/d in 2H17 on course to materialize.
  • The surge in US tight oil growth in the 1H17 has started to decelerate including the deployment of oil rigs in the shale basins as well as the productivity of the wells. All factors point to headwinds ahead.
  • The oil market structure has finally switched from contango to backwardation, a condition that has eluded the market since its collapse in the fall of 2014. This further confirms that the fundamentals of supply and demand that have been out of balance are gradually but steadily rebalancing.

Mr. Chairman, Excellencies, distinguished delegates,

While the grounds for our cautious optimism regarding the rebalancing process are irrefutable, it is critical we maintain our focus.

We should be in no doubt that the production adjustments that were extended in May 2017 will remain vital to the market rebalancing process in the coming months.

I urge all of us not to be side-tracked from the critical task at hand. We should focus on the now, and ensure that each step we take moves us closer to our stated goal.

With that, I look forward to our deliberations here today.

Thank you.

HE Mohammad Sanusi Barkindo, OPEC Secretary General

HE Mohammad Sanusi Barkindo, OPEC Secretary General