(Adds details, quotes, background) By Vladimir Soldatkin and Olesya Astakhova MOSCOW, June 3 (Reuters) – Global oil markets are heading towards rebalancing, Qatar’s energy minister said on Friday, a day after the Organization of the Petroleum Exporting Countries failed to agree on a clear oil output strategy at a meeting in Vienna.
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Opec oil cartel failed to agree on a new oil production ceiling at a meeting yesterday, its secretary-general said, meaning the cartel’s crude will continue to flow without formal constraints.
Teheran argues it should be allowed to raise production to levels seen before the imposition of now-ended Western sanctions over Iran’s nuclear programme.
“We will be very gentle in our approach and make sure we don’t shock the market in any way”, new Saudi Energy Minister, Khalid al-Falih, told reporters.
Mohammed Barkindo of Nigeria, who was named as OPEC’s new secretary-general, said the group may come up with an output ceiling in the future but is comfortable without one for now. It was also tired of the growing United States shale oil market, and felt that maintaining the production was the only way out of this problem. The global benchmark crude traded at a premium of 42 cents to West Texas Intermediate.
Analysts still took away positives from the meeting in Vienna, as Saudi Arabia showed restraint.
Brent for August settlement was at US$50.11 a barrel on the London-based ICE Futures Europe exchange, up 7 cents, at 8:13 a.m.in London.
US crude stockpiles dropped by 1.37 million barrels as production fell for a 12th week, according to a report from the Energy Information Administration on Thursday.
He said Iran’s oil exports have doubled since the last OPEC meeting in December to about 2.023 million bpd in May.
Domestic crude production also fell to the lowest weekly level since September 2014, the agency said, indicating that spending cuts by oil companies are taking their toll on output.
The OPEC has long been considered as a mediator, and has always intervened to ensure oil price stability.
“The fact that OPEC has made a decision to elect a secretary-general today after so many years of haggling is in itself a positive signal not only to the market but to the worldwide community that OPEC is back, stronger”, Barkindo told a small group of reporters after OPEC’s meeting.
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Andy Lipow of Lipow Oil Associates said the market breathed “a sigh of relief” after Saudi Arabia “indicated it would not flood the market with additional quantities of oil”.
