Oil cartel OPEC is courting US shale oil producers and other crude-producing nations to join the "noble" initiative of curtailing global supply to bring stability to the market, its Secretary General Mohammed Barkindo said today.
"When we brought together 24 producing countries in December of last year for declaration of cooperation, we made it very clear that it was still open to other producers who might want to join in this voluntary noble initiative to restore stability to the market," he told reporters here.
Saudi Arabia and Russia, he said, are leading the initiative to bring in more producers. "It is still work in progress," he added.
The Organization of the Petroleum Exporting Countries (OPEC) is trying to reinstate its dominance in the oil industry by trying to maintain crude prices at a sustainable level. Oil prices have crashed to USD 50s now, from the high of USD 147 per barrel in 2008.
Last year, the bloc and some others producers decided to reduce production by around 1.2 million barrels per day from January 1, 2017. But US production has soared by almost 10 per cent this year, driven largely by shale drillers.
"I would like to invite prospective candidates, producers to join this global effort in order not only to restore the stability that had eluded this market for three years, but how to sustain it going forward. The more, the better for the industry as well as global economy," he said.
The OPEC had earlier this year reached out to the independent shale oil producers in the US.
"We had our exploratory meetings to explore areas of common interest. We were both pleasantly surprised with the outcome and the call by independents themselves that we need to continue this interaction and we are looking forward to reconvening these meetings with them shortly," he said.
Barkindo further said the shale producers in North America have been urged to "take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle".
Declining to say what price of oil would the OPEC consider as an equilibrium price that restores market stability, he quipped that equilibrium is a function of supply and demand.
"And once we are able to restore the balance, that equilibrium price will materialise and that will be of the best interest of the global economy," he said. "We will achieve this as soon as supply and demand are restored to balance."
The OPEC is trying to address "one variable that has been out of work since 2014", he said. "To balance the equation, you need this variable to come back to normalcy. That variable remains stocks overhang."
In the last 3-4 months, very massive de-stocking is going on, he said. "The market structure has switched to backward making it uneconomic to continue to keep storage. We are satisfied with the pace and level of the rebalancing process," he added.
Barkindo had on Sunday stated that the OPEC and other oil producers might need to take "some extraordinary measures" next year to rebalance the oil market.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)