OPEC, allies to keep oil market stability beyond 2020

A poor economic outlook has depressed oil prices. (Reuters)
Updated 15 October 2019

OPEC, allies to keep oil market stability beyond 2020

  • Compliance with production quotas among OPEC and its allies was at 136 percent, says Barkindo

NEW DELHI: OPEC and its allies are committed to maintaining oil market stability beyond 2020, with physical supplies relatively tight globally, OPEC Secretary-General Mohammad Barkindo said on Tuesday.

He added that compliance with production quotas among OPEC and its allies was at 136 percent, curbing global supplies, while production growth in North America including US shale basins was decelerating.

OPEC, Russia and other oil producer allies, a grouping known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020 to support oil prices. The producers are scheduled to meet again on Dec. 5-6.

“I have been hearing a resounding chorus from all the players that they are determined not to allow a relapse to the downturn that we just navigated out of,” Barkindo told the India Energy Forum by CERAWeek, referring to a period of low oil prices in 2014-2015 that had led OPEC to cut output. 

“They will do whatever is possible within their powers to ensure relative stability is sustained beyond 2020,” he said.

FASTFACT

1.2 m

OPEC, Russia and other oil producer allies, a grouping known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020.

In its latest monthly report for October, OPEC trimmed its forecast for world economic growth in 2020 to 3 percent from 3.1 percent. The report stated: “It seems increasingly likely that the slowing growth momentum in the US will carry over to 2020.”

A poor economic outlook has depressed oil prices, with Brent down about 22 percent from its 2019 peak of $75.60 a barrel reached on April 25.

The US-China trade war is affecting the global economy and oil demand, and financial markets have an increasingly bearish view of economic growth, Barkindo said.

Still, India remains a major driver of global oil demand with growth of 127,000 bpd in August, he said.


US trade offensive takes out WTO as global arbiter

Updated 29 min 15 sec ago

US trade offensive takes out WTO as global arbiter

  • Two years after starting to block appointments, the US will finally paralyze the WTO’s Appellate Body
  • Two of three members of Appellate Body exit and leave it unable to issue rulings

BRUSSELS: US disruption of the global economic order reaches a major milestone on Tuesday as the World Trade Organization (WTO) loses its ability to intervene in trade wars, threatening the future of the Geneva-based body.
Two years after starting to block appointments, the United States will finally paralyze the WTO’s Appellate Body, which acts as the supreme court for international trade, as two of three members exit and leave it unable to issue rulings.
Major trade disputes, including the US conflict with China and metal tariffs imposed by US President Donald Trump, will not be resolved by the global trade arbiter.
Stephen Vaughn, who served as general counsel to the US Trade Representative during Trump’s first two years, said many disputes would be settled in future by negotiations.
Critics say this means a return to a post-war period of inconsistent settlements, problems the WTO’s creation in 1995 was designed to fix.
The EU ambassador to the WTO told counterparts in Geneva on Monday the Appellate Body’s paralysis risked creating a system of economic relations based on power rather than rules.
The crippling of dispute settlement comes as the WTO also struggles in its other major role of opening markets.
The WTO club of 164 has not produced any international accord since abandoning “Doha Round” negotiations in 2015.
Trade-restrictive measures among the G20 group of largest economies are at historic highs, compounded by Trump’s “America First” agenda and the trade war with China.
Phil Hogan, the European Union’s new trade commissioner, said on Friday the WTO was no longer fit for purpose and in dire need of reforms going beyond just fixing the appeals mechanism.
For developed countries, in particular, the WTO’s rules must change to take account of state-controlled enterprises.
In 2017, Japan brought together the United States and the European Union in a joint bid to set new global rules on state subsidies and forced technology transfers.
The US is also pushing to limit the ability of WTO members to grant themselves developing status, which for example gives them longer to implement WTO agreements.
Such “developing countries” include Singapore and Israel, but China is the clear focus.
US Commerce Secretary Wilbur Ross told Reuters last week the United States wanted to end concessions given to then struggling economies that were no longer appropriate.
“We’ve been spoiling countries for a very, very long time, so naturally they’re pushing back as we try to change things,” he said.
The trouble with WTO reform is that changes require consensus to pass. That includes Chinese backing.
Beijing has published its own reform proposals with a string of grievances against US actions. Reform should resolve crucial issues threatening the WTO’s existence, while preserving the interests of developing countries.
Many observers believe the WTO faces a pivotal moment in mid-2020 when its trade ministers gather in a drive to push through a multinational deal — on cutting fishing subsidies.
“It’s not the WTO that will save the fish. It’s the fish that are going to save the WTO,” said one ambassador.