Opening Remarks by the Chairman of the JMMC

Delivered by HE Issam A. Almarzooq, Kuwait's Minister of Oil and Minister of Electricity and Water, and Chairman of the Joint Ministerial Monitoring Committee (JMMC), at the 6th Meeting of the JMMC, 29 November 2017, Vienna, Austria.

Excellencies, ladies and gentlemen,
Good morning.

It is my pleasure to welcome you all to the OPEC Secretariat for the 6th Meeting of the Joint Ministerial Monitoring Committee (JMMC).

We are nearing the one-year anniversary of the implementation of the historic ‘Declaration of Cooperation’, which saw 24 participating OPEC and non-OPEC producing nations come together to help restore order and predictability to the global oil market after one of the worst price declines in history.

This historic and courageous display of cooperation was the result of tireless consultations, high levels of commitment and a great deal of compromise and flexibility. The process has also required a great deal of patience and perseverance, considering the magnitude and complexity of re-establishing balance to the global oil market.

Here, allow me to express my deep appreciation to each and every OPEC Member Country and participating non-OPEC producer, who made great sacrifices, worked the extra hours and went the extra mile to help us get to where we are today. With your continued dedication and determination, I am confident we will reach the mountain top together.

I would also like to recognize my esteemed Alternate Chairman on this Committee, His Excellency Alexander Novak, Minister of Energy of the Russian Federation, as well as the President of the Conference, His Excellency Khalid A. Al-Falih and the OPEC Secretary General, Mohammad Sanusi Barkindo. Their leadership and expert input at every juncture and milestone of this historic process have been instrumental to the ongoing success of the ‘Declaration of Cooperation’.

Another key ingredient in the progress made thus far has been the high-quality input we receive every month from the Joint Technical Committee (JTC), in coordination with the OPEC Secretariat. I know we can count on you to continue operating in the highly professional manner we have come to appreciate and value over the past year.

Excellencies, ladies and gentlemen,

Since our last meeting in September, the oil market has continued to strengthen and is evidently on the path to rebalancing.

The destocking process, both onshore and offshore, has continued at an accelerated pace in recent months. From May to October, the OECD stock overhang fell by around 140 mb to stand at 140 mb above the five-year average in October. Looking at the first ten months of the ‘Declaration of Cooperation’ there has been a decline of around 200 mb.

Additionally, crude in floating storage has come down by an estimated 50 mb since June, with the help of a narrowing contango, and then Brent, WTI and Dubai flipping into backwardation for the first time since 2014.

As far as demand goes, we have seen global oil demand growth strengthening. In the December 2016 Monthly Oil Market Report (MOMR), we saw global oil demand growth for 2017 at a level of 1.15 mb/d. This has been revised up considerably to now stand at 1.5 mb/d. For 2018, this encouraging dynamic is set to continue with the same forecast of 1.5 mb/d.

Looking at the global economy, the forecast is bullish, as the recovery has picked up steam this year. We are currently forecasting growth this year of 3.7%, supported by positive momentum and a possible tax reform in the US, improving global trade, continued positive outlooks for the Eurozone and, to some extent, Japan, as well as robust growth in China and India. Improved outlooks for Russia and Brazil are also contributing factors. In 2018, this positive trend is expected to continue with a further robust growth forecast of 3.7%.

This positive outlook has clearly been supported by the unprecedented conformity levels to the production adjustments in the ‘Declaration of Cooperation’. These consistently high levels, at or above 100%, have quieted the voices of naysayers in the industry who initially expressed doubts regarding the commitment of the 24 participating OPEC and non-OPEC producing countries to bring stability back to the oil market.

Ladies and gentlemen,

Let us not take this positive momentum as a reason to sit back and relax. Rather, let us be energized by the progress we have made, and continue to push onward until we reach our final goal.

We are clearly on the right path, but there is still work to be done to bring the remaining inventories down to the latest five-year average, at which point we can say we have reached our objectives of a balanced and stable global oil market.

Thus, today, we will take stock of the recent oil market developments, assess conformity levels, both individually and collectively, and establish what more can be done in the months ahead to improve these levels in order to reach our common goal.

Here, I think it is pertinent to underline the fact that some participating producing countries continue to over-perform, and I think it is appropriate to recognize their extraordinary efforts. This is also a reminder of how important it is for each country to reach its own conformity goals. Each delegation should be driven to achieve full and timely conformity.

Excellencies, ladies and gentlemen,

Reflecting back on the first year of implementation, the ‘Declaration of Cooperation’ has established the requisite structure and foundation for the sustainable stability we all seek. It will be essential, going forward, that this platform be solidified, institutionalized and expanded.

Let us not forget that our every move is being scrutinized by the international community. It is thus crucial that we maintain a laser focus on our goal of achieving a rebalanced global oil market. This will boost urgently needed industry investment and fuel future economic growth and prosperity around the world.

Thank you for your attention.

HE Issam A. Almarzooq, Kuwait's Minister of Oil and Minister of Electricity and Water, and Chairman of the JMMC (r); and HE Alexander Novak, Russia's Energy Minister

HE Issam A. Almarzooq, Kuwait's Minister of Oil and Minister of Electricity and Water, and Chairman of the JMMC (r); and HE Alexander Novak, Russia's Energy Minister

Group photo of OPEC and non-OPEC Ministers taken at the 6th JMMC Meeting in Vienna

Group photo of OPEC and non-OPEC Ministers taken at the 6th JMMC Meeting in Vienna