IEA: OPEC’s sticking to target may speed up market rebalance
Baku, Azerbaijan, Oct. 11
By Leman Zeynalova – Trend:
If OPEC sticks to its new target of 32.5 million barrels per day (bpd), the market’s rebalancing could come faster, according to the Oil Market Report of the International Energy Agency (IEA).
During an informal meeting in September, OPEC producers agreed to cut down the oil output to 32.5 bpd from current production of 33.24 million bpd. How much each country will produce is to be decided at the next formal meeting of OPEC in November.
“Iran, Libya and Nigeria – all aiming to raise output – are said to be exempt from cuts. A significant rebound in supply from Libya and Nigeria and further growth from Iran would suggest that bigger cuts would have to be made by others, such as Saudi Arabia, to meet the new output target,” said the IEA report.
The report said the current price of oil has caused discomfort for all producers – even those with hefty financial reserves, such as Saudi Arabia.
“For high-cost non-OPEC producers the pain has been especially acute. The impact of steep investment cuts made in 2015 is being felt now: nearly 0.9 million barrels per day has been lost since a year ago,” said the IEA.
“The lower price environment has also forced companies big and small to cut costs and do more with less,” said the IEA, adding that as a result, non-OPEC supply is expected to return to growth next year.
“Our supply-demand outlook suggests that the market – if left to its own devices – may remain in oversupply through the first half of next year. If OPEC sticks to its new target, the market’s rebalancing could come faster,” said the IEA.