The results of the OPEC+ meeting: oil production will be reduced because the “off-track” countries (but not Russia)

OPEC+ will remove 400-500 thousand barrels/day from the market by means of countries that have not fulfilled their obligations yet.

 

OPEC + will ensure the reduction of oil production in the near future by means of countries that are not fulfilling their obligations yet. The issue of a more significant decrease in production by all the member countries of the cartel (+ Russia) may be raised only in December.

These are the main results of the OPEC+ Ministerial Monitoring Committee meeting, which was held on Thursday in Abu Dhabi, Prime media writes.

The reduction volumes for the first half of 2019 were agreed at 1.2 million barrels per day, compared to October 2018. In early July, OPEC+ countries unanimously approved an extension of their agreements on existing conditions for another nine months, until the end of March 2020.

The OPEC+ Ministerial Monitoring Committee, which includes representatives of Saudi Arabia, Russia, Algeria, Kuwait, the United Arab Emirates, Kazakhstan, Nigeria, Iraq and Venezuela discussed the implementation of agreements on limiting oil production and the market situation at a meeting on Thursday in Abu Dhabi.

At the opening of the meeting, the new head of the Saudi Arabian Ministry of Energy, Prince Mohammad bin Salman bin Abdulaziz Al Saud, who replaced Khalid al-Falih on Sunday in this post, said that the alliance’s policy towards the stability of the oil market will be unchanged.

The representative of Oman said that the OPEC+ countries in August complied with an agreement to reduce oil production by 136%. At the same time, the decline in production will be increase by means of countries that have not fulfilled their obligations yet, “if they comply with the deal in full”. According to forecasts, this will remove 400-500 thousand barrels per day from the market.

“The recommendation is that... not even a recommendation, but an agreement, that those who do not comply with the agreement will fully comply with it. So we will get a bigger reduction in production, it will be deeper than now”, the Minister of Oil of Oman told reporters after the meeting.

As it was reported, in August the Russian Federation had not fulfilled its obligations to reduce production volumes, referring to the situation with contaminated oil in the Druzhba oil pipeline (the incident had occurred in April).

OPEC+ countries are primarily concerned about the lack of obligations fulfillment under the deal to reduce oil production in Nigeria, Iraq and Kazakhstan.

For example, according to the data provided, Kazakhstan is surpassing the deal right now, but there are expectations that its technical work at one field will end soon, and in the end it will begin to produce more. At the same time, representatives of these three countries assured the committee members that they are committed to 100% implementation of the agreement.

Commenting on the possibility of deepening the reduction in oil production in the framework of the Vienna deal, the Minister of Energy of Saudi Arabia said that discussions on this subject are possible only in December:

“The OPEC meeting in December will be preceded by a meeting of the Ministerial Monitoring Committee (OPEC+ – ed.). So any discussions on this issue are possible at this meeting”.

The leadership of the Ministry of Energy of the Russian Federation noted that the participants in the meeting have not yet discussed the extension of the deal to reduce oil production for 2020. According to Minister Alexander Novak, this is premature – the situation on the market may change – the general approach of the parties to the deal is that it is necessary to monitor the situation, qualitatively predict and have the necessary tools for a quick response.  

 

Source: oilreview.kiev.ua

Tags: oil, hydrocarbon production, добыча нефти, ОПЕК+

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