Oil-producing cartel OPEC has reached a crucial turning point in its measures to return the oil market to balance, the organization's secretary-general told a CNBC-moderated panel at the World Energy Congress in Istanbul.
"I think we have restored the broad consensus among oil producers and I'm glad that this consensus we have got major consuming countries also on board. We have turned the wheel going forward," Mohammad Barkindo said Tuesday.
Barkindo said when he assumed office in August that he wasn't sure where the energy institution or market was heading — especially as the oil market was going through its "most severe" and longest period with production and supply ramping up intensively over the course of just two years.
"This cycle became not only the most severe but also the longest so far. It is in the midst of this, that I took office in August and immediately together with my colleagues and partners — within OPEC and outside of OPEC — we began extensive consultations in order to build a consensus going forward."
"It was obvious that there was need for a change in direction and Algiers demonstrated the need to have this new direction in order to return the market to some form of stability and stability on a sustainable basis. Hence the Algiers accord which saw OPEC for the first time since 2008, agreeing on [a range] of a ceiling for all of its 14 member countries."
"Now that's highly significant and Algiers marked a turning point in OPEC."
In September, OPEC managed to reach consensus on managing the market at its meeting in Algiers, with the group agreeing to reduce output to a range of 32.5–33.0 million barrels per day (mb/d) across all its members. At the time, OPEC estimated that its current output came in around 33.24 mb/d, according to Reuters.
"From the consultations that we have embarked upon before and post Algiers, both within OPEC and outside it, I think there is a convergence of views between the entire producer group and even with the consumers."
"To the extent that it seems to me that the demarcation now between producers and consumers is becoming more and more [blood], because at the end of the day, we are [oil] producers and at the end of the day we are all consumers."
The secretary-general went on to add that he believed the environment had "changed positively among oil producers", adding that despite members countries being at war in previous years, members have still been able to sit down in meetings and take decisions on behalf of the entire organization, not just themselves.
"What Algiers demonstrated to the world is that OPEC still has the resolve and is capable and able to defend its collective group interest, not only on behalf of OPEC but (for) all producers as well as consumers."
Following the group's decision, the secretary-general said OPEC was now looking beyond the framework that Algiers had given them, and wasn't concerned on focusing on a specific price for oil.
"We are not interested in a specific price, we are not targeting price. And why? Because this current cycle unlike the previous five cycles is driven by supply fundamentals," said Barkindo, adding that to restore stability on a sustainable basis, oil producers needed to address the current overhang issue before a fair price could be achieved.
"Now we are focusing on post-Algiers. Algiers has given us that framework to implement the decision as well as to engage our friends and partners from the non-OPEC. We are in the process of putting up these building blocks post Algiers, hopefully to Vienna."
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