Baku, Azerbaijan, Feb. 16
By Aygun Badalova - Trend:
Successfully implemented agreement between Saudi Arabia, Russia, Venezuela and Qatar to freeze oil production should support oil prices but there are reasons to be cautious, Jason Tuvey, Middle East Economist at British economic research and consulting company Capital Economics believes.
"To start with, not all OPEC members have signed up to the deal (notably Iran and Iraq). History would also suggest that compliance may be an issue. And even if output is frozen, this will still be at extremely high levels - Saudi oil production remains close to record highs of more than 10 million barrels per day," Tuvey said in a report, obtained by Trend.
At the same time the economist believes that output freeze will not be a game-changer for the Gulf economies.
"While we did not expect oil production to be cut in order to shore up oil prices, we had never anticipated that output would rise significantly over the few years," Tuvey noted.
The Capital Economics' forecasts remain unchanged - they expect oil prices to recover to $45 a barrel by end-2016, but this based on stronger demand and cuts to non-OPEC supply rather than a successful deal between OPEC and Russia.
Energy ministers of Russia and a number of OPEC countries have agreed to freeze the production of oil after the negotiations in Qatar's capital Doha.
Oil output will be stabilized at the level of Jan. 11, according to Saudi Arabia's oil minister Ali Al Naimi.
Cartel's 13 members produced 32.335 mbpd in January, about 130,700 bpd more than December 2015. The official quota for OPEC oil production stand at 30 million barrels per day.
Alexander Novak, Russian energy minister, said Jan. 28 that the planned OPEC meeting in February with representatives of other oil-producing countries could discuss reduction of oil production by each producer country by five percent, but a general agreement is needed for that.