Algiers — Algeria’s energy minister said he was confident oil prices will return to between $65 and $70 a barrel by April, but stressed that the OPEC alliance would cut production further if the market had not responded by then.
“If the situation requires a further reduction, we will do it,” Algerian energy minister Mustapha Guitouni said Sunday in Algiers, according to the official APS agency, in response to the plunge in oil prices which has seen benchmark Brent crude drop from $86 a barrel in October to close to $50 a barrel at the end of 2018.
OPEC, Russia and nine other non-OPEC allies agreed earlier this month to a combined 1.2 million b/d supply reduction for the first six months of 2019, to shore up what many expect to be weakening market fundamentals ahead. They plan to meet in April to assess market conditions, given the surge in US shale production — which is likely to rise above 12 million b/d in 2019 — along with concerns over the global demand outlook.
“We have to wait until the end of the first quarter of 2019 to see the expected results of the new agreement on the reduction of production,” the minister said, adding “oil prices will, before next April, rise [to] between $65 and $70 a barrel.”
Guitouni said he believed the $65-$70 to be the goldilocks price — the one that seems optimal for producers and consumers — even though OPEC has repeatedly emphasized it does not target prices but focuses on supply and demand fundamentals, with stock levels being a guide to market balancing.
Algeria produces around 1.06 million b/d according to the S&P Global Platts OPEC survey and is part of the OPEC/non-OPEC monitoring committee.
Russia’s energy minister Alexander Novak said recently that the OPEC-led alliance should avoid a hasty reaction to recent fluctuations in oil prices and instead continue to monitor the market.
Brent crude was trading almost 5% higher at close to $55 a barrel in European trade Monday.