ASSESSMENTS

OPEC: An Oil Alliance Struggles Against Its Own Potential

Sep 22, 2017 | 23:41 GMT

For the sake of their economies, Russia and Saudi Arabia want a controlled end to production cuts.

Russian Energy Minister Alexander Novak (left) and Kuwaiti Oil Minister Essam al-Marzouq oversee the OPEC meeting in Vienna on Sept, 22, 2017. Members of the organization and its allies reviewed progress on their 2016 agreement to curb oil output.

(JOE KLAMAR/AFP/Getty Images)

Highlights

Saudi Arabia and Russia will continue pushing to extend the deal to cut production by major oil producers, but in 2018 they will turn their attention to an exit strategy from the agreement.
Libya and Nigeria, which have collectively boosted oil production by almost 1 million barrels per day this year, have worked against the deal, but their production has now plateaued.
The aim of the deal is not to boost oil prices but to remove the risk of a collapse.

OPEC's work to cut oil production may be finally starting to pay off. The oil-exporting organization and its allies have slashed output by about 1.6 million barrels per day (bpd) since the beginning of the year, helping to lift oil prices. And key producers, such as Saudi Arabia and Russia, have already indicated that they may push to extend the production-cut deal beyond its expiration date in March 2018. But the organization's Joint Ministerial Monitoring Committee (JMMC), meeting in Vienna, declined to make a recommendation on the cuts. Kuwaiti Oil Minister Essam al-Marzouq said that there was no need to decide now that the market was "well on its way toward rebalancing."...

Keep Reading

Proceed to sign up

Already have an account?