UAE oil minister says Opec+ job not yet complete

Countries participating in the Opec and non-Opec production restraint deal have yet to achieve their mission of balancing the market as global oil inventories remain on an upward trend, UAE oil minister Suhail al-Mazrouei said.

"The job is not complete, [and] we are still seeing some inventory build-up," al-Mazrouei said in Jeddah today. "This is probably a continuation [of the deal] until we see a true balance in the market."

The UAE minister was speaking ahead of a meeting tomorrow of the Joint Ministerial Monitoring Committee (JMMC), which oversees compliance with the agreement to cut production by 1.2mn b/d in January-June.

Al-Mazrouei said that the JMMC would review both crude and products OECD inventories in its assessments of current oil market conditions, and especially US stock levels, which he says are on the rise.

His comments come as Opec's latest Monthly Oil Market Report (MOMR) last week raised its demand estimate for the group's crude by 300,000 b/d to 30.6mn b/d this year, compared with its previous assessment of 30.3mn b/d last month. The IEA on 15 May said that the call on Opec crude in the second quarter will be 700,000 b/d above the organisation's April production.

Since Opec and its non-Opec allies struck their agreement to scale-back supplies, the market has seen a sharp fall in Venezuelan output, while the late-April decision by Washington to end all sanctions waivers for Iran's remaining crude customers has sparked further declines in Iranian supplies.

Should the market require additional volumes, al-Mazrouei gave assurances that the Opec, non-Opec alliance, known collectively as Opec+, would be open to raising output to meet those needs.

"I do not want to talk about specific countries, but overall, we are looking at filling any gap from the whole group," al-Mazrouei said. "If there is a need to attend to any shortage in the market, we will do it. But we do not see that."

The Opec+ group was roughly 168pc compliant with their cut commitments in April, Opec delegates told Argus.

Argus estimated compliance among the 11 Opec members participating in the deal averaged 151pc in April, with Nigeria and Iraq — who were both invited to join the JMMC in recent months — both failing to meet their commitments.

"You remember earlier in the year, there were complaints that compliance is not there and we told you that we are expecting it to improve as we move along, and it did", al-Mazrouei said.