Oil producers to draft long-term alliance deal by end-2018, says UAE minister

Oil producers led by Saudi Arabia and Russia aim to draft an agreement on a long-term alliance by the end of this year, United Arab Emirates energy minister Suhail al-Mazroui told the local National newspaper on Thursday.

The newspaper also quoted him as saying OPEC was urging its members to build oil capacity buffers to temper any wild upswings in price due to the weak US dollar this year.

OPEC and non-OPEC producers are restraining production to prop up prices under a deal that is to expire at the end of 2018. Saudi Arabia said last month that the producers aimed to continue cooperating beyond the end of this year.

Work in progress

The charter for this long-term alliance is a work in progress but a draft framework might be endorsed and signed by all 24 countries before the end of the year, Mazroui said in the interview, without elaborating on what the framework would look like.

Mazroui, president of OPEC, also said the organization was incentivizing all its members to have capacity buffers.

“That buffer is (to ensure) that if you have a surge (in demand) or issue in one of the countries you can replace that in the market and achieve a short and medium-term re-balance of the market,” he said.