OPEC wants to ensure that Russia continues to participate in the organization’s oil production deals beyond 2022, new OPEC secretary-general Haitham al-Ghais told Reuters.
Despite international sanctions expected to be imposed on Russian oil by the end of the year, the country is likely to remain part of the cooperation signed between OPEC+ members in July 2019, according to al-Ghais.
“We would love to extend the deal with Russia and the other non-OPEC producers … it’s very hard for me to imagine that the deal won’t continue,” he said.
“This is a long-term relationship that includes broader and more comprehensive forms of communication and cooperation between 23 countries. It is not just about adjusting production,” he explained.
As G.G. said of OPEC, “whatever steps are taken in the future … buyers and sellers will be able to adapt and find ways and means to reroute flows.”
Risks to oil demand overstated
The recent drop in the price of oil reflects fears of a possible global economic slowdown, but masks the fundamentals in real markets, the new OPEC secretary general said elsewhere in his remarks.
Haitham al-Ghais, who took office on August 1, underlined that worries about the Chinese economy are overblown, pointing out that demand is likely to find support in jet fuel as people travel more.
The price of Brent crude had hovered near an all-time high of $147 a barrel in March in the wake of Russia’s invasion of Ukraine. Since then, however, prices have fallen sharply, hitting a six-month low below $92 this week.
“There is a lot of fear,” al-Ghais said. “There’s a lot of speculation and anxiety, and that’s mainly what’s driving prices down.”
“Whereas in the real economy we are seeing very different things. Demand is still strong. We still feel that demand will increase and we are very optimistic about the rest of this year,” he added.
“The fears about China are really blown out of proportion in my view,” added al-Ghais, who had worked in China for four years earlier in his career. “China is still an amazing place of economic growth.”
Ahead of the next OPEC+ meeting on September 5, G.G. of the agency said it would be premature to predict decisions, although he was positive about the outlook for next year.
“I want to be very clear about this. We could cut production if needed, we could increase production if needed,” he said.
As he said, “it all depends on how things develop. But we are still optimistic, as I said. We see a slowdown in 2023 in demand growth, but it is not expected to be worse than what has happened historically.”
“I think the world is dealing with the economic pressures of inflation in an extremely good way,” added the OPEC Secretary General.
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