OPEC and its partners may not need to extend the November 2016 crude oil production cut agreement beyond its March 2018 deadline if everyone fully complies with their quotas, Kuwait’s Oil Minister Essam al-Marzouk told media yesterday.
Al-Marzouk noted that OPEC’s compliance rate had hit 116 percent, without adding, however, that this figure referred to August production specifically, while the September data from OPEC’s secondary sources revealed that compliance had fallen, with seven OPEC members pumping more in September than they did in August and three—Iraq, Iran and Gabon—producing above their quotas.
The Kuwaiti minister, who leads the ministerial committee that monitors compliance with the deal, went on to add that the top priority for the cartel right now was to make all members stick to their quotas in order to render redundant another extension of the deal. He said OPEC will decide on whether to extend or not at its next meeting, which will take place on November 30 in Vienna.
Al-Marzouk’s comments come a week after OPEC’s secretary general Mohammed Barkindo said the cartel may need to take some “extraordinary measures” to make the deal work, without elaborating on what these measures might include.
The OPEC agreement with Russia and 10 other producers to take off 1.8 million bpd from the global oil market was originally supposed to last for six months, but in May this year the partners decided to extend it until the end of March 2018. Recently, Russian President Vladimir Putin suggested the cut might be extended further, to the end of 2018. Related: Trump Just Made Iran A Wildcard
Last week, Bloomberg cited sources privy to OPEC’s internal forecasts as saying the cartel expected the surplus on global oil inventories to clear by the third quarter of 2018. The surplus—the excess oil inventories in OECD members—currently stands at 171 million barrels above the five-year average.
These forecasts are in conflict with Al-Marzouk’s comments about the oil deal not needing another extension: all oil production forecasts for 2018 see higher non-OPEC daily production rates, and if OPEC and its partners end the deal on March 31, this would mean another 1.8 million bpd added to the higher global production.
By Irina Slav for Oilprice.com
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