Oil Minister Bijan Namdar Zanganeh said that he was confident the OPEC and non-OPEC members would remain committed to the output cut deal agreed in November, noting that oil prices would rise further as a result.
"I am certain that the OPEC and non-OPEC members will cut oil output as committed. This will remove the oil surplus from the market, balance the demand and supply, and lift prices".
The Organization of the Petroleum Exporting Countries (OPEC) agreed on November 30, 2016 to cut output by 1.2 mbd to 32.5 mbd for the first six months of 2017, in addition to 558,000 bpd of cuts agreed to by independent producers such as Russia, Oman and Mexico.
An official of the International Energy Agency (IEA) said on Sunday that global oil prices will witness 'much more volatility' in 2017 even though markets may rebalance in the first half of the year if output cuts pledged by producers are implemented.
"I would expect that we will see a rebalancing of the markets within the first half of this year," said Fatih Birol, executive director of IEA, the Paris-based global energy watchdog.
"But what I want to say (is) that we are entering a period of much more volatility in the market ... the name of the game is volatility," he told Reuters Television in Abu Dhabi.
Oil prices fell on Friday and ended the week three percent lower on lingering doubts over the extent of OPEC cuts, with sentiment worsened by concerns over the economic health of the world's second-largest oil consumer, China, after it reported the steepest falls in overall exports since 2009.
Birol said although the OPEC agreement could signal higher oil prices, it would also encourage more production from the United States and elsewhere. Higher prices could also weaken global demand for oil, he added.
"I expect the US shale oil will go back to increasing production this year," Birol said.
He added that a recent trend of declining Chinese oil production due to low prices could be reversed if the market strengthened.
Data from the US Energy Information Administration showed crude production rose notably last week, particularly in 48 southern states. Overall production was 8.95 mbd last week — the most since April of last year.
OPEC and the independent producers are cutting supplies to remove a global glut and prop up prices, which at around $56 a barrel are half their level of mid-2014, hurting the revenue of exporting nations.
Birol said his main concern now was lack of investment in new oil supplies after low prices over the past two years forced the shutdown of many projects across the world.
"This year, if there are no major investments coming we may well see in a few years from now significant supply-demand gap with serious implications on the market."
