Unity & understanding

OPEC Bulletin Commentary January 2019

It was the painter Vincent Van Gogh who once said that “great things are done by a series of small things brought together.” This is evidently an apt statement for the first week of December 2018 that culminated in the unanimous decisions taken at the 175th Meeting of the OPEC Conference and the 5th Meeting of the OPEC and non-OPEC Ministerial Conference.

It was a week with a lot of moving parts, a plethora of meetings and one that required teamwork and collaboration from all those involved. Without doubt, it was a pivotal week for OPEC, and the ongoing success of the ‘Declaration of Cooperation’.

It had become evident during the fourth quarter of 2018 that there was a broad consensus that prospects for 2019 pointed to higher supply growth than expected global requirements, and there were also signs of a potential slowdown in demand, taking into account prevailing uncertainties.

Thus, it was vital for OPEC, and its non-OPEC partners in the ‘Declaration of Cooperation’, to thoroughly examine the potential gap between supply and demand in 2019, and to see how this might impact inventory levels, overall market and industry sentiment and the extremely ‘hard won’ market balance that has been achieved over the past two years.

As with any multi-party negotiations, it was vital to listen and address the points of view of all those involved, both individually and collectively. Once again, OPEC proved up to the task, with the OPEC Conference’s communiqué announcing that “in view of the current fundamentals and the consensus view of a growing imbalance in 2019, the Conference decided to adjust OPEC overall production by 800,000 barrels/day from October 2018 levels, effective as of January 2019, for an initial period of six months, with a review in April 2019.”

This was then followed by a communiqué from the 5th OPEC and non-OPEC Ministerial Meeting that included voluntary adjustment contributions from non-OPEC participating countries in the ‘Declaration of Cooperation’ of 400,000 b/d over the same time period.

Through compromise and collaboration, all participants in the ‘Declaration of Cooperation’ reached unanimous decision; one that continues the efforts of the past two years to pursue a balanced, stable and sustainable global oil market, which serves the interests of consumers, producers, the industry and the global economy at large.

In speaking at the joint press conference at the end of the two ministerial meetings, Khalid A Al-Falih, Saudi Arabia’s Minister of Energy, Industry & Mineral Resources, noted that while the negotiations were extended “the spirit was very cordial, the level was extremely high, that the relationships between all ministers was friendly, business like, very conducive to building trust and we are confident we are going to deliver.”

In looking to the longer term, given the increasingly complex and interdependent world that we live in, OPEC believes that the core tenets of collaboration and fraternity among nations is the best way forward to overcoming challenges. Therefore, the two meetings also discussed ways and means to build on the success of the market stabilizing efforts of the ‘Declaration of Cooperation’ in the years ahead.

Both meetings pledged to further strengthen the historic cooperation within a framework under the draft Charter of cooperation between oil producing countries, which was endorsed in principle and is set to be finalized and ratified by the participating countries.

Experience has repeatedly shown us that the enduring principle of cooperation and the bravery to try something new, such as the ‘Declaration’, can bring about great success. It is OPEC’s aspiration that the cooperation with non-OPEC continues to go from strength-to-strength.

It proved to be an exhausting, but satisfying week. It was a reminder to us all that understanding is a two-way street, and in unity we can achieve wonderful things.

It was William Shakespeare who once wrote: “Things won are done; joy’s soul lies in the doing.” All those involved in achieving the decisions taken by the Ministerial meetings in the first week of December, should be satisfied with their great efforts.

Nonetheless, the Organization will not rest on any laurels; it remains fully focused on maintaining market balance, and sustaining the stability that all stakeholders desire.

OPEC Bulletin January 2019

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