OPEC Secretary General Mohammad Sanusi Barkindo, has signaled optimism that the international oil market is rebalancing itself at an accelerated pace and that there is finally light at the end of the dark tunnel for the first time in about three years.
He was delivering an address to members of the global oil cartel at the Oil & Money conference, on October 19 2017, in London, England. Skeptics have said over the past months that countries such as Guyana should not look towards a future with oil, since demand is dwindling due to the push towards clean energy. However recent analyses by OPEC and other agencies paint a different picture.
During the address, Barkindo said that this is thanks not only to members of OPEC but also the non-OPEC countries. “Together with our friends from non-OPEC we definitely turned an historic page in December 2016 and today we are helping write a new chapter of sustained stability in the global oil industry.”
He spoke of there being a feeling of optimism “…from Russia’s President Vladimir Putin; from a variety of OPEC and non-OPEC Ministers, all of whom are part of the historic ‘Declaration of Cooperation’; as well as in India, a major consuming country that is expected to lead oil demand growth in the years and decades ahead.”
Barkindo continued, “I have gauged the industry’s temperature. There is no doubt that we are starting to feel a warmer glow. There is now more talk of a brighter outlook. It is a feeling that has been missing from the industry for far too long. This positivity is underscored by recent data.”
He noted that the global economic recovery has gathered momentum in 2017 and that global oil demand growth has also been robust and there are signs of a strengthening trend.
He said that OPEC was not alone regarding the more positive oil demand numbers, as other agencies have also upwardly revised their output projections.
Giving a rationale for the recovery, Barkindo said that the process of onshore and offshore destocking continues apace. “At the start of 2017, the OECD stock overhang was at 338 mb above the five-year average. This level fell gradually in the first four months of this year to just below 300 mb. In the following five months from May to September, however, it fell by over 140 mb to stand at 159 mb above the five-year average for the month of September,” he said.
He said that crude in floating storage is also down by an estimated 50 mb since June, and that there has been a massive drainage of oil tanks across all regions, in terms of both crude and products. “A balanced oil market is now fully in sight,” Barkindo said.