Kuwait: No Opec meeting without outside agreement

An emergency Opec meeting will not be held unless non-Opec producers agree to co-operate with the group in reducing a global oil glut by cutting output, Kuwait's Opec governor Nawal al-Fezaia said today.

"Unless there is actual, tangible and clear cooperation to reduce supply by all parties, whether within or outside Opec, and even by small producers, there will be no such meeting," said al-Fezaia.

A meeting of the parties that did not lead to clear cooperation and results "would have a very bad effect on the oil market," she said.

Opec is willing to co-operate if non-Opec producers show a willingness for actual co-operation, she said.

Al-Fezaia said two meetings between Opec and non-Opec producers have taken place at the level of experts, "but those non-Opec producers are not willing to cooperate. They make statements about willingness to co-operate, but in reality, that does not happen," she said.

Saudi Arabia, which is leading Opec's strategy of defending market share rather than price, has made cutting its production conditional on non-Opec producers Russia, Mexico and Oman also contributing to cuts. It also wants fellow-Opec member Iran to co-ordinate its plans to boost output with Opec, and it wants Iraq to indicate at what output level it would be willing to join in any cuts that Opec may decide.

Al-Fezaia said economic growth in industrial countries, particularly Germany and the US, is improving, and Chinese growth is expected to be steady. Global demand would rise this year by 1.2mn b/d, and non-Opec supplies would fall as lower prices would make output more difficult for higher-cost producers.

"If all those factors combine, this will reduce supplies and inventories, which are still high compared with the last five years", she said.

She described current prices as "very low," adding that as of 2017, prices would average $40-60/bl. "I do not think we are looking at substantial changes over the next four years," she said.

Opec secretary-general Abdullah al-Badri and state-owned Saudi Aramco chairman Khalid al-Falih have both said they expect the oil market to start rebalancing itself in the second half of this year.