Kuwait's Oil Minister Essam al-Marzouq has delivered an anticlimactic statement regarding the upcoming OPEC ministerial meeting in St. Petersburg: the ministers will discuss compliance levels with the November oil output cut deal.
The meeting, to involve the relevant ministers from all OPEC members and non-OPEC producers that signed up for the production cut last year, fueled expectations that the cartel and its partners in the deal may consider deeper cuts, seeing as the current level of output reduction has not been particularly effective in supporting international oil prices in any consistent way.
However, Al-Marzouq told Kuwait's news agency KUNA that the ministers will meet on Saturday to review the latest monthly report compiled by the technical committee set up to track compliance among OPEC members and their partners. Also, he said, the committee will discuss on Sunday and Monday an OPEC report concerning the global oil markets in June.
Perhaps the only suggestion that the meeting might discuss a change in strategy was that, as KUNA quoted the minister as saying, the ministers will look into "more relevant suggestions by member states."
OPEC, excluding Libya and Nigeria, agreed with Russia and 11 other oil producers to cut their combined oil output by a daily 1.8 million barrels in a bid to stabilize prices, pressured by a previous OPEC strategy of pumping at maximum to arrest the increase in U.S. shale oil output.
This cut, however, failed to achieve much, pushing prices up to about US$55 for Brent for a short while. Compliance has been a concern given OPEC's history of failing to stick to such deals, although the first three months after the deal was inked saw pretty strict quota adherence from most participants in the cartel.
The participants in the deal agreed to extend the cuts until March 2018 three months ago but this, too, failed to do much to lift prices, which is why some analysts called on OPEC and Russia to cut deeper. Ecuador, meanwhile, earlier this week announced it will stop cutting its oil output, setting what could be a dangerous precedent for OPEC, as many of its members are having a hard time sticking to their reduced quotas even at non-full compliance rates.
By Irina Slav for Oilprice.com
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