Global oil demand growth remains strong, underpinning the OPEC+ group’s decisions of the past months to return more supply to the market, Shaikh Nawaf Al-Sabah, chief executive of Kuwait Petroleum Corporation, told Bloomberg in an interview published on Tuesday.
“It’s a market that’s been more resilient than initially expected by some traders,” the CEO of the state oil firm of one of OPEC’s biggest producers, told Bloomberg.
“Therefore you’re seeing a slow but methodical and planned increase in supply coming in from the OPEC+ countries that has led to a relative stability in prices.”
Kuwait, a founding member of OPEC, is the cartel’s fifth-largest producer, behind Saudi Arabia, Iraq, Iran, and the United Arab Emirates (UAE).
OPEC+ has been reversing its production cuts since April, betting on strong demand to absorb the additional barrels and not sink prices as supply grows.
Most recently, reports emerged this weekend that the OPEC+ group, which meets on October 5, will decide to continue raising its production.
The alliance will consider reversing in November another 137,000 bpd of the combined 1.65 million bpd cuts that it will begin unwinding in October with a first batch of 137,000 bpd, sources with knowledge of the group’s plans told Bloomberg this weekend.
Despite the production hike from OPEC+, oil prices have not collapsed, with Brent prices trading closer to $70 than to $65 per barrel in recent weeks. Part of this could be due to estimates that the group is not hiking oil production as much as the headline figures in the agreement suggest, as some members are close to capacity while others are compensating for previous overproduction.
Kuwait sees demand continuing to rise in China and in other emerging markets, Kuwait Petroleum’s Al-Sabah told Bloomberg.
Kuwait also has “significant” spare production capacity that could be employed if the market needs more oil, the executive added.
Oil production capacity in Kuwait has hit a more than decade high of 3.2 million barrels per day, Oil Minister Tareq Al-Roumi told local newspaper Al Qabas last week.
By Michael Kern for Oilprice.com
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