OPEC Secretary General Mohammad Barkindo speaking during a session of the Russian Energy Week international forum in Moscow, Russia recently — Reuters NEW DELHI, Oct 15 (Reuters): The Organisation of the Petroleum Exporting Countries (OPEC) and its allies are committed to maintaining oil market stability beyond 2020, with physical supplies relatively tight globally, OPEC Secretary-General Mohammad Barkindo said on Tuesday.
He added that compliance with production quotas among OPEC and its allies was at 136 per cent, curbing global supplies, while production growth in North America including US shale basins was decelerating.
OPEC, Russia and other oil producer allies, a grouping known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020 to support oil prices. The producers are scheduled to meet again on Dec. 5-6.
"I have been hearing a resounding chorus from all the players that they are determined not to allow a relapse to the downturn that we just navigated out of," Barkindo told the India Energy Forum by CERAWeek, referring to a period of low oil prices in 2014-2015 that had led OPEC to cut output.
"They will do whatever is possible within their powers to ensure relative stability is sustained beyond 2020," Barkindo said.
In its latest monthly report for October, OPEC trimmed its forecast for world economic growth in 2020 to 3 per cent from 3.1 per cent, saying "it seems increasingly likely that the slowing growth momentum in the US will carry over to 2020".
A poor economic outlook has depressed oil prices, with Brent down about 22 per cent from its 2019 peak of $75.60 a barrel reached on April 25.
The US-China trade war is affecting the global economy and oil demand, and financial markets have an increasingly bearish view of economic growth, Barkindo said.
Still, India remains a major driver of global oil demand with growth of 127,000 bpd in August, he said.
Reports from Singapore and New Delhi add: Asia's largest refiner, Sinopec, is weighing plans to cut crude oil imports in December and reduce output at its refineries after a surge in global tanker freight rates hit margins, four sources with knowledge of the matter said.
The cost of shipping crude to Asia has surged over the past two weeks after companies stopped using nearly 300 tankers for fear of violating US sanctions against Iran and Venezuela.
Refining margins have yet to catch up with the jump in freight rates, forcing refiners to absorb the high shipping costs for now.
"Refineries are facing strong pressure as spot premiums are high and freight rates have jumped, so it's not economical to import crude," the source said on Tuesday, adding that the company was also considering drawing down crude inventories to manage its import demand.
A second source said Sinopec was still studying how much volume and which cargoes from suppliers in the Americas, Europe, Africa and the Middle East it could cut among those due to arrive in China in December.
"The cargoes have been purchased so it's still unsure whether the volume, especially for long-haul cargoes, can be cut," he said.
""Freight rates have jumped to $8.0-$9.0 a barrel, up by $7.0 a barrel. It's eaten up a chunk of the (refining) margins," he added.
In a sign that the company was already trying to unload some of its excess supply in the spot market, Sinopec's trading arm Unipec UK offered four west African crude cargoes last week, but failed to sell them, traders said.
Sinopec could not be immediately reached for comment.
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