Opec’s secretary general Mohammed Barkindo said “Algeria was a turning point” for the 14-country producer group, which agreed last month to cut oil production to bolster crude prices.
According to Financial Times, After two years of letting prices spiral lower to put pressure on rival producers, such as US shale companies, Opec is now seeking to coordinate a supply cut as economic pressure among members builds, reports Anjli Raval and Neil Hume.
“We did not anticipate…that it was going to take this long (for supply and demand to come into balance),” said Mr Barkindo at an industry conference in London.
Many industry analysts remain sceptical the group will be able to agree a deal that would be the first production cut since the financial crisis in 2008.
But Mr Barkindo is hopeful that delegates will be able to iron out crucial details, such as production allocations for each country, to bring Opec’s collective target to 32.5-33m b/d from November.
“All the building blocks will be in place for implementation,” he said.
The aim of the (accord reached in Algiers), he said, was to “accelerate” a fall in stockpiles
that could bring the market into balance faster than industry analysts expect.
Although some member countries such as Iran and Iraq have questioned Opec’s official supply figures, that rely on secondary sources such as analysts and consultants, Mr Barkindo said this was “not a problem” to achieving a deal by November.
Any deal would include Russia, he said, which has “played a key role” since the failed Doha talks earlier this year.
Mr Barkindo said he would meet with Russia’s energy minister on Monday.
The production range agreed in Algiers “provides flexibility” and allows the group to take into account the special circumstances of certain countries. Iran, which seeks to raise its production after years of sanctions, has sought an exemption from any deal, as have conflict ridden countries such as Nigeria and Libya.
Mr Barkindo said he hoped Algeria could create a “more permanent framework” for discussions between Opec and non-Opec nations, such as Russia, so they would not just convene in times of crisis.
Fatih Birol, the head of the International Energy Agency, which tends to act for industrialised nations and big consumer countries, said at the same conference if Opec can achieve a deal this would put “upward pressure” on prices.
But he warned that a price move towards $60 a barrel would unleash more oil from high-cost producers including the US, may reverse a slide in output from countries such as China, and put downward pressure on oil demand growth.
Without any Opec action supply and demand would balance in the second half of next year, but the successful implementation of a deal would hasten this to the first half.