Options open for December Opec meeting: Barkindo

All options are open for the Opec and non-Opec meeting in December, where a decision is likely to be made on production levels for the whole of 2020, Opec secretary-general Mohammed Barkindo said at the Oil and Money conference today.

Barkindo said the December conference will take "appropriate, strong, positive decisions that will set us on the path of heightened sustainability for 2020". Asked about the prospect for deeper cuts being agreed at the December meeting, he said that "at the moment, all options are open".

Chief executives of leading trading houses expect continued pressure on oil prices in the coming months. The short-lived spike following the 14 September attacks on some of Saudi Arabia's oil facilities has raised questions about demand strength, with Vitol chief executive Russell Hardy saying demand forecasts have been declining all year.

Barkindo today highlighted that demand remains a concern, noting contributing factors including the UK's proposed exit from the EU, declining global manufacturing activity and the US-China trade war.

"We remain optimistic the US and China can reach agreement. If not, the impact could be catastrophic," he said. But, he also said that Opec's forecast for world oil demand to grow by 1.08mn b/d in 2020 "cannot be regarded as a demand slump".

"In sum total, we do not see a global recession, we see some headwinds, but we see the commitment of countries to overcome these challenges", Barkindo said.

"The market would like to test Opec's resolve during the course of the next year," Gunvor chief executive Torbjorn Tornqvist said yesterday, adding that it is not enough just to maintain production. "There is too much slippage inside [Opec], there is too much non-Opec production coming. So, they need to do something".

Opec and its non-Opec partners earlier this year extended their supply production limits out to March 2020. Barkindo said this arrangement will be reviewed in December so a decision can be made "that will probably will cover the whole of the year".

He said Opec has extended a formal invitation for the US to participate in a charter of co-operation, which aims to formalise co-operation on market management issues and to transform the ad-hoc Opec and non-Opec group into a formal organisation that aims to provide long-term stability to the oil markets. Around 97 oil-producing countries are free to join, he said.

"It is in the interest of the global economy, global industry, to have the biggest producer," Barkindo said, referring to the US.

Opec is still deciding when to convene in the inaugural meeting of the charter, and each country has a different process for ratifying it. Barkindo said that is carefully designed to "avoid the legal encumbrances of certain countries, like in the US". Barkindo has held periodic discussions with US producers and government officials in the last two years to discuss market fundamentals. US security laws would prevent any publicly-listed company from co-ordinating production and prices, and Barkindo said in the past that is not on the agenda.

Today, Barkindo reiterated Opec's commitment to tackling climate change, but said that in 2040 renewable energy will make up just 19pc of the global energy mix. Oil and gas would supply 28pc and 25pc of global energy needs then, respectively, he said.

"In the period to 2040, fuel efficiency improvement is expected to result in a far greater reduction in oil demand than the increasing penetration of alternative fuel vehicles", he said.