May 23 (UPI) -- While there's broad support for extending the effort to balance the market through production declines, Kuwait's oil minister said oil prices shouldn't spike.
Kuwaiti Oil Minister Essam al-Marzouq said Tuesday a proposal is under consideration to increase the cuts outlined in an agreement coordinated in part by the Organization of Petroleum Exporting Countries to balance an over-supplied market with managed declines. Speaking with the official Kuwait News Agency, known also as KUNA, the minister said "all options are on the table" to bring the market back to balance.
The OPEC-led effort went into force in January and established a floor under the price of crude oil at around $50 per barrel. The floor collapsed on lingering supply-side strains and weakened demand, though market recovery emerged last week when Russia and Saudi Arabia called for a nine-month extension of the agreement, three months longer than outlined in the original proposal.
Under pressure in early Tuesday trading, the price for Brent crude oil is still up more than 2 percent from the start of last week. Kuwait's oil minister declined to speculate on a trading band for oil prices, but offered modest expectations for the trend.
"I do not expect a remarkable leap in prices by the end of the year," he said. "But I do agree with the majority of the projections, which forecast that prices would continue at a fixed level and may record a slight rise by the end of the year."
In a statement on first quarter earnings, BP Chief Financial Officer Brian Gilvary said that despite a $4 per barrel improvement in crude oil prices from the fourth quarter, the market direction was still unclear given the uncertainty surrounding the durability of OPEC's production agreement and the level of shale oil production from the United States.
Shale production has been more resilient to a weakened oil market than expected and U.S. output has balanced some of the balancing efforts from OPEC.
Kuwait's oil minister said production agreements from possibly two dozen non-OPEC members could support the effort to balance the market.
"They are not major producers, but their move could have a psychological impact on the global oil market," he said.