*Osama Suleiman from Vienna
On the impact of Brent crude oil, which has reached since the beginning of this year about 17.5%, the Organization of Petroleum Exporting Countries (OPEC) confirmed that the success of the partnership with producers outside the Organization proved that producers' vision of the market is correct and that the pessimists - critics of the agreement - were wrong.
It pointed out that the announcement of cooperation has brought about profound transformational effects in the course of the market and deeper effects in the global industry as well.
According to a recent report by the International Organization, the fundamentals of the market have become very strong, especially with the high proportion of compliance in achieving adjustments to voluntary production levels.
It noted that cooperation is continuing and prospects for the industry are brighter.
The report said, according to the International Energy Forum, that OPEC will play a very important role in the future because of its enormous and constructive capabilities in dealing with the challenges that are facing the world's energy system, most notably its ability to address the problem of global energy poverty, its potential access to energy resources, and its ability to sustain energy costs and achieve sustainable development.
"With the challenges facing the global economy today, dialogue has become more important, especially in the presence of many complex economic issues such as climate change, energy transfer and the impact of geopolitical factors," it added.
It pointed out that there is no alternative to confronting these issues and working together as partners through dialogue and cooperation.
According to the World Energy Forum, if investment patterns continue on track and on the modest current levels, we will be on the verge of a new wave of higher record of oil prices; it is a challenge not only for producers, but also for consumers.
According to the report, the greatest danger falls on consumers. It also noted that excessive price rises are not good for both sides, whether producers or consumers.
It pointed out that investors face a state of relative hesitation because they do not have a clear picture of the future of the market.
It stressed that the current uncertainty draws attention to the importance of the impact of the expectations of the international organizations, especially OPEC and the International Energy Agency, which occupy leading and influential positions in the markets.
It emphasized that the International Energy Forum chose to work with OPEC seriously and strongly in order to provide an important platform for the expectations, so that people can see them clearly.
The report noted the successful visits carried out by the last mission of the Organization of to each of Azerbaijan, India and Iraq.
It pointed out that the three countries play a pivotal role in the crude oil market, whether they are producers or consumers with the highest degree of cooperation and the desire to promote the industry and strengthen the position of the global oil market.
The report praised Azerbaijan's unique status in the history of oil. It explained that they played a very special role in the wealth of the industry in the 21st century.
It stressed the importance of fulfilling the country's responsibilities as a producer that joined the Declaration of Cooperation on 10 December 2016.
Azerbaijan has always been one of the highest producers of compliance rates with voluntary adjustments in production.
The report pointed out that in addition to the "OPEC" special relations with Azerbaijan, they are currently recording the highest levels.
It also said that this excellence in relations is what facilitated the visit of Secretary Mohammed Barkindo and the accompanying mission in March.
"Since OPEC was established 58 years ago in Baghdad, changes have taken place on a massive scale. Yet one thing remains constant is OPEC's firm commitment to market stability and to the interests of producers, consumers and the global economy as well," it said.
The report stressed that the historic "Declaration of Cooperation" that reflected the deep commitment of producers and reinforced the long-established principles of the OPEC system.
It expected the development of the form of cooperation and the survival of the alliance among the OPEC countries with 10 other producers from outside the Organization in order to meet the inherited responsibilities as leading producers in the oil industry.
It pointed out to the first cooperation of its kind, which appeared in December 2016, which was seen by some as not promising.
Many fear that it will happen with the expectation that there would be no impact on the market, which has proved the days contrary to expectations.
The OPEC report said the spirit of the "Declaration of Cooperation" showed that the industry had better days ahead and a promising future that could be made by all parties.
The global energy market has undergone a number of fundamental transformations due to the abundant production of shale oil and renewable energy, which has made the market uncertain. No one knows about oil price developments in the next two or three years because of the possibility of unexpected developments in renewable energy production.
It pointed out that ten years ago, investors in oil and gas were more confident and assured of the position of the market, while now the situation has declined from the confirmation.
It emphasized that in the past three years, investment in crude oil reserves has reached its lowest level in the past 60 years, which has imposed many major challenges on the future of the crude oil industry.
The international report said that the oil market forecasts until 2040 announced by all the relevant international organizations and parties confirm that the supply of fossil fuels will continue to provide most of the needs of consumption compared to other energy resources.
The report pointed to the Secretary General of OPEC, Mohamed Barkindo, as he was saying that there is a lot of talk about new energy or what may be called some "energy transmission" in recent times.
He pointed out that the only thing we can agree on is that the world will need more energy in the coming decades. He referred to the expected increase in energy demand by 35 percent until 2040. "At the same time, we must recognize the threat posed by climate change to our environment," Barkindo said in the report.
He noted that OPEC is still fully involved in the Paris Convention.
Barkindo said that the fundamental challenge of energy in its new era could be summed up in two questions: how can we ensure that there is sufficient supply to meet the expectation of future demand growth? And, how can such growth be achieved in a sustainable manner, balancing the needs of people with regard to their social well-being and between the economy and the protection of the environment?
With regard to the future of oil and gas dependence, the report said that oil and gas together are expected to save more than half of the world's energy needs by 2040 with a relatively stable common share at 52-53 per cent over the forecast period of approximately 25 years.
Oil consumption is expected to reach more than 111 million bpd by 2040, an increase of about 15 million bpd.
The report concluded that stability is strongly required in the crude oil market.
It pointed to the importance of enhancing investment and expanding energy production in order to provide modern energy services to those deprived of them, to promote the growth of the global economy, achieve the security of demand and supply, and meet and provide and secure the needs of consumers.
Oil prices fell at the end of last week.
But Brent crude hit a sixth consecutive week of gains, supported by a sharp drop in Venezuela's output, strong global demand, and pending US sanctions on Iran.
According to Reuters, Brent closed the trading session low 79 cents, 1 per cent, to settle at 78.51 dollars a barrel.
At the previous session, global benchmark crude jumped above $ 80 a barrel for the first time since November 2014.
Investors expect to see more gains at least in the short term due to supply concerns.
Brent ended the week up 1.9%, extending its gains since the beginning of the year to about 17.5%
The US WTI crude fell 21 cents, 0.29 percent, to settle at $ 71.28 a barrel.
The week ended with an increase of 0.9%, the third weekly gain, respectively.
Crude prices have been supported by OPEC's consensus supply cuts aimed at curbing the supply.
Jack Allardays, an oil and gas research analyst at Cantor Fitzgerald, said,"Global stocks are near long-term averages, which suggests that the coordinated supply reductions between OPEC and non-members are successful."
In addition to OPEC cuts, strong demand, a decline in Venezuela's production and the announcement by the United States earlier this month of its intention to renew sanctions on OPEC member Iran helped push Brent up 20 percent since the start of the year.
The US investment bank Jefferies said sanctions on Iran could block more than 1 million bpd from the market.
With crude prices hitting levels that are not seen since 2014, Allardays warned that rising fuel costs could hurt consumption.
At $ 80 a barrel, Asia's thirst for oil is costing the region $ 1 trillion a year, more than twice the 2015-2016, the previous two years of OPEC cuts that began in 2017.
Barclays Bank raised its forecast yesterday for crude oil prices for the current and next years. "The market is getting weaker as Venezuela's production falls and additional supply disruptions are possible with the United States re-imposing sanctions on Iran," it said.
The bank raised its forecast for the price of Brent crude for 2018 to $ 73 a barrel from $ 61.8, and forecast its price in 2019 to $ 70 a barrel from $ 60.
Its forecast for the US WTI crude rose to $ 68.20 a barrel this year from $ 57 earlier, and its forecast for 2019 to $ 65 a barrel from $ 55.
Barclays said, "The oil markets may suffer even more in both 2019 and 2020."
On the other hand, the number of active oilrigs in the United States has stabilized this week after rising for six consecutive weeks. Although crude prices jumped to their highest levels since 2014, which was prompting drilling companies to extract record amounts of oil, especially rock.
"The total number of oil rigs has stabilized at 844 diggers in the week ending May 18," Baker Hughes Energy Services said in its closely monitored weekly report.
The total number of oil rigs in America, a preliminary indicator of future production, is much higher than a year ago when it reached 720 diggers as energy companies increased production in parallel with OPEC's efforts to cut global supplies in an attempt to capitalize on rising prices.
"US oil production is expected to rise to a record 7.2 million bpd in June," the Energy Information Administration said this week.
Earlier this month, the Department of Information predicted that the annual average of US oil production would rise to a record 10.7 million bpd in 2018 and 11.9 million bpd in 2019, from 9.4 million bpd in 2017.
The total number of active oil and gas rigs in the United States since the beginning of the year was 987, up from an average of 876 in 2017.
This indicates that the number of rigs is set to be the highest since 2014 when it recorded an average of 1862 diggers.
