June 22 (UPI) -- The multilateral effort to bring the global energy market back to a balance between supply and demand has fallen short, an exporter told a Kuwaiti news agency.
Members of the Organization of Petroleum Exporting Countries and a handful of other producers, notably Russia, started implementing a deal in January to ease the supply-side strains that weighed on oil prices last year through coordinated declines in production.
In May, parties to the agreement decided to extend the terms by three months longer than originally planned, to March 2018. Market analysts were anticipating deeper cuts and crude oil prices have been on a steady decline since the start of June.
Mohammed al-Shatti, a deputy chairman of the Kuwait Petroleum Corp., told the official Kuwait News Agency, known also as KUNA, he expected crude oil prices to trade in the range of $45 per barrel and $55 per barrel until equilibrium returns.
"This plan has failed to notch up the ultimate goal of rebalancing the oil market, mainly due to the reluctance of OPEC and non-OPEC producers to cut oil output," he was quoted by KUNA as saying.
Iranian Oil Minister Bijan Zageneh said Wednesday from Tehran that talks were under way with other OPEC members to review current market conditions. Mid-June gains in crude oil and gasoline inventories in the United States, the world's largest economy, dragged crude oil prices from $50.41 at the start of June to around $45 in early Thursday trading.
Zangeneh cautioned that cutting production "has always been a difficult task in OPEC."
Kuwait's oil production has been steady for most of the year at around 2.7 million barrels per day. Iran is allowed room to increase production to recapture a market share lost to sanctions and recorded 3.8 million barrels per day last month, a small gain from April.
Only four of the 13 members of OPEC reported production declines from April to May. In mid-June, sources close to OPEC said the organization was considering deeper production cuts to ease the supply overhang.