OPEC bulletin 11/17
very sharp decline in oil prices. Pessimism prevailed in the oil mar-
ket. The failure of the variousmeetings between the main producers
was also perceived negatively by the markets, since the production
of OPEC and non-OPEC participating countries accounts for almost
half of world oil supply.
Besides the fact that the ‘Declaration of Cooperation’ aimed at
concrete actions, it was above all extremely credible. Indeed, for
the first time, non-OPEC countries solemnly pledged themselves to
join OPEC through the signing of the ‘Declaration of Cooperation’.
In the medium- and long-term, the ‘Declaration of Cooperation’
will contribute to the stability of the market. It will allow producers
to move towards a convergence of analysis that will support the sta-
bility of the market. Through cooperation, constructive and positive
dialogue, as well as the actions that will follow, the market will be
attentive to the avoidance of destabilization, such as that which it
has experienced in previous years.
Without the ‘Declaration of Cooperation’ taken by 24 producing
nations, what might the oil market and the global economy look
It should be recalled that before the Algiers Accord of September
2016, low oil prices had damaged investments, which experi-
enced a significant decline that threatened the security of supply
in the medium-term. It would not be speculative to say that with-
out the ‘Declaration of Cooperation’, the oil market would have
continued to be marked by an overhang of oil stocks, generated
by a war of prices and market shares, and by oil prices oscillating
between $20/b and $30/b. I dare not make a projection of the eco-
nomic damage that would have been borne by oil producing coun-
tries and, by extension, industrialized countries. Nothing would
have stopped some producers from producing more to sell more.
Without this Declaration, we would have slowed the production
of shale oil in North America, but we would also have prolonged
the crisis and increased the risk of a future crisis with the delayed
return of shale oil production and a lack of medium-term capacity.
The negative consequences of this on the world economy would
have been devastating.
The ‘Declaration of Cooperation’ will remain a highlight of inter-
national cooperation. I regret that oil producing countries such as
the United States that benefit directly from this agreement could not
allow their companies to cooperate with OPEC, which has shown
to the world great maturity and a responsibility assumed for the
benefit of the world economy.
How do you view oil market prospects for 2018?
The oil market is sensitive to the natural decline of oil fields, the
production of new oil fields, technological changes and global
growth. All of these factors affect the direction the market will take.
However, considering that technological developments can both
favour the production of shale oil and improve global oil supply by
extending the life of mature fields, they will not have a significant
impact in the short-term on global oil supply.
This means that the main driver of the oil market for 2018
will be global growth. This is based on the assumption that (a) an
increase (between 1.4m b/d and 1.5m b/d) of production in the
United States and other non-OPEC producers should satisfy the
increase (between 1.3m b/d to 1.4m b/d) of world oil demand; (b)
the 24 signatories of the ‘Declaration of Cooperation’ will continue
to maintain their adjustments until the end of 2018; and (c) OPEC
will neutralize the ‘special conditions’ of Libya and Nigeria, includ-
ing an increase in the rate of adjustment of production provided
for at the 171
Meeting of the Conference on November 30, 2016.
We could then glimpse a resumption of the global stock overhang
and reach the historical average of the last five years prior to 2014
towards the end of the 2Q of 2018.
This situation will have a positive impact on prices, which
will then fluctuate between $60/b and $65/b. Notwithstanding
the fact that the rebalancing of the oil market has already begun,
the 24 producers that adopted the ‘Declaration of Cooperation’
will continue to have a responsibility in 2018 to accelerate this
Mustapha Guitouni, the current Minister of Energy of Algeria.
Russian Ministry of Energy.