Baku, Azerbaijan, May 4
By Maxim Tsurkov - Trend:
Thanks to the OPEC+ agreement on reducing oil production, the balance of supply and demand in the world market is gradually recovering, Energy Minister of Azerbaijan Parviz Shahbazov said in an interview with Trend.
The minister reminded that following the results of the second meeting between OPEC and the countries that are not members of the Organization of Oil Exporters, the period of the agreement on reducing oil production was to expire by the end of 1Q2018. However, at the third meeting, held in December, it was decided to extend the deal until the end of the year.
"At present, the countries participating in the agreement are fulfilling their obligations, holding meetings, discussing the development of the mechanism of cooperation in the OPEC + format and its long-term perspective. All these are undoubtedly the result of justified expectations from cooperation in the framework of OPEC. Such cooperation demonstrates not only the protection of OPEC's reputation and interests, but also its importance both for oil exporters and consumers," Shahbazov said.
He added that this cooperation is a historic event from the point of view of the unity of OPEC and the countries not being members of the organization, and a progressive process from the point of view of the approach to crisis situations.
"The functionality of the decision taken to stabilize the world market oil prices is provided by the countries that have joined the "Declaration of partnership". Each member country remains committed to its obligations. Therefore, the cooperation under the auspices of OPEC, which continues from the end of 2016 to the present day, is commendable. This cooperation can also serve as a platform for oil countries to discuss the use of new technologies, new challenges in the energy sector and the risks that may arise under the influence of geopolitical factors, as well as the extent to which oil will maintain its position as a type of fuel in the world energy balance in the future," said Shakhbazov.
He went on to say that sharp price fluctuations that were observed in the world oil market before the Vienna agreement, have now been replaced by stability, which is accompanied by growth.
"The balance of supply and demand is gradually recovering. Commercial oil reserves, which play a crucial role in pricing, have declined significantly. Of course, we should not ignore economic growth and global economic indicators amid a positive trend in the oil market. According to forecasts by reputable international organizations, the world economy is expected to grow in 2018. This, in turn, is the main factor influencing the growth of demand for oil, which ultimately affects the price. Of course, if we talk about oil prices in the world, we should take into account all the factors," the minister said.
In December 2016, eleven countries (including Azerbaijan) that are not members of OPEC agreed at the meeting of oil producers in Vienna to reduce production by a total of 558,000 barrels per day. The agreement was concluded in the first half of 2017 and extended at a meeting on 25 may 2017 until the end of 1Q2018. At the last OPEC meeting in Vienna, the agreement was renewed until the end of 2018. Azerbaijan acceded to this decision.
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