OPEC’s El-Badri Calls on Global Oil Producers to Help Curb Glut

“Oil prices will start to grow after the glut in the market is eliminated”, the OPEC Secretary General, Abdallah Salem el-Badri, said at a conference in London.

“It is vital the market addresses the issue of the stock overhang”.

“Given how this developed, it should be viewed as something OPEC and non-OPEC tackle together”, al-Badri said.

Astonishingly perhaps, there is now 260mln barrels of extra supply in the world at the end of previous year, up from a negative 85 million in 2013. The market needs to see inventories come down to levels that allow prices to recover and investments to return.

He said: “The current environment is putting this future at risk”. Saudi Arabian Oil Co.is spending as much now as it did before the crash in crude prices, Chairman Khalid Al-Falih said Monday.

“The lack of a regulator – the role played before by OPEC – which balanced oil prices and gave a long-term perspective, has resulted in the market being handed over to short-term positions”, he said in his remarks.

Turbulence in oil markets continues unabated as OPEC – the exporter cartel – weighed in again with comments, which affected sentiment.

OPEC members have pushed a robust production policy even as crude oil prices drift further away from mid-2014 peaks above $100 per barrel. Pumping record volumes “is not the best way to improve economics”, he said.

Originally due to step down in 2012, El-Badri’s term has been extended several times as members fail to agree on successors proposed by Saudi Arabia, Iran and Iraq. Mr Draghi’s desire to ensure markets are fully acclimatising to any policy decision well in advance, will mean that he is one of the more interesting central bankers to follow.

“We already see some signs that supply and demand fundamentals will start to correct themselves in 2016”, Badri said at the conference at Chatham House. Quoting Dr Al Sada, Reuters reported Opec is still evaluating the need for an extraordinary meeting after receiving a request to hold such a gathering because of a steep fall in oil prices. Global demand is forecast to increase by about 1.3 million barrels a day while non-Opec supply is expected to contract by about 660,000 a day, he said.

“We received a request and oil ministers are discussing that”, he said.