The global deal to rein in oil output has removed “85 percent of the problem” of oversupply, and OPEC and allied producers are seeking ways to cooperate after the agreement ends, according to UAE Energy Minister Suhail Al Mazrouei.
The world economy is benefiting from the cuts, he said at a Bloomberg Businessweek Middle East conference in Dubai.
Mazrouei, who also serves this year as president of the Organization of Petroleum Exporting Countries, isn’t concerned that a potential international trade war might upset the crude market, he said Tuesday in a Bloomberg TV interview in Dubai.
“I’m not that concerned about a trade war getting to the oil market,” Al Mazrouei said in the interview.
“It may affect the cost of drilling, the cost of completion, but I think overall the effect is going to be minor to the oil prices.”
Participants in the oil-cuts accord plan to meet later this month in Jeddah, Saudi Arabia, to assess their progress toward clearing a glut and re-balancing the market.
Saudi Arabia, Russia, the UAE and other crude oil producers agreed in November to extend the deal through this year. Brent crude has gained 1.5 percent in 2018 and was 25 cents higher at $67.89 a barrel at 11:55 a.m. in London.
The benchmark fell 2.5 percent on Monday after China imposed retaliatory import tariff rates on US goods, the latest move in an escalating trade dispute between the world’s largest economies.
Russia has been a “great partner” in the cuts agreement, and the majority of participants in the deal are supportive of a longer-term cooperation between OPEC and non-OPEC producers, Mazrouei said in the interview.
Producers should first achieve their goal of reducing crude inventories in developed economies to the five-year average before they consider adopting a different measurement for when the oil market is re-balanced, he said.
OPEC and its allies have held talks about changing the way they gauge the impact of their production cuts, including possibly using use a seven-year inventory average, according to delegates from the group.
“I would prefer to focus on achieving the mission first,” Al Mazrouei told Bloomberg TV.