Crude prices appear to have been cheered by a renewed commitment in recent days to output curbs by oil-producing countries.
A meeting earlier this month in Baku, capital of Azerbaijan, saw a 25-nation agreement to support the price by restraining production reaffirmed.
This has helped oil maintain what has been a strengthening price trend in recent months. A month ago, on 26 February, Brent crude – a benchmark used in many international contracts – traded at $65.21 a barrel, well up on the price three months ago – it changed hands at $54.47 on 26 December.
Today, it traded up 0.22% at $68.12 a barrel.
West Texas Intermediate (WTI) stood at $59.73 today, down 0.52% on the last closing price but up from $56.94 a barrel on 27 February and $46.22 three months ago, on 26 December.
Countries sticking to quotas
Led by the 14-nation energy cartel, the Organisation of Petroleum Exporting Countries (OPEC), a group of oil producers have agreed a series of deals to curb production, the first of which was signed in December 2016. A new agreement came into force in January to take 1.2 million barrels a day out of production.
Although this amounts to just about 1.2% of total production, global supply and demand is very closely balanced, at about 100 million barrels a day, so quite small changes in supply can have a big effect on the price.
In total, 25 countries are involved in the agreement. OPEC includes Saudi Arabia and Iran, while the so-called NOPEC group, whose members have not joined OPEC but who are sympathetic to the cartel, takes in Russia and Oman. It includes also Azerbaijan, host of the recent meeting of the OPEC-NOPEC monitoring committee, which oversees compliance with the agreed production quotas. In the past, OPEC quotas have been rendered less effective by cheating by members pumping more oil than they had agreed, in order to enjoy a free ride on the back of other members’ output restraint.
But at this latest meeting, the committee said that “overall conformity [with the quotas] reached almost 90% for the month of February 2019, which is up from 83% in the month of January”.
OPEC conference president Manuel Salvador Quevedo Fernandez said: “We…need to recognise that we are living in a fast changing world of new energy realities; one where we need to continually evolve, enhance the gravitas of OPEC and this historic co-operation, and further our outreach to all stakeholders.”
Of the OPEC-NOPEC partnership, he added that “we need to be flexible, adaptable and realistic”, saying: “There is no doubt that the future can see us achieve great things together, just as we have achieved great things over the past two years or so.”
But there was no escape from geo-political tensions. Venezuela has been hit by sanctions from Washington, with Mr Quevedo, head of the country’s state-owned oil company PdVSA, named by the US Treasury as one of “five officials aligned with illegitimate former President Nicolas Maduro, who continue to repress democracy and democratic actors in Venezuela and engage in significant corruption and fraud against the people of Venezuela”.
Mr Quevedo told the Baku meeting that Venezuela was “under siege from illegitimate sanctions”, adding: “I hope we can count on the international community and the support of OPEC members and non-OPEC [countries].”