Non-OPEC agreement threatened by 2 factors

Oil&Gas Materials 11 December 2016 13:34 (UTC +04:00)

Tehran, Iran, December 11

By Mehdi Sepahvand –- Trend:

Although non-OPEC oil producers have agreed to cut their outputs, their decision is threatened by two factors, says former Iranian representative in Organization of the Petroleum Exporting Countries Mohammad Ali Khatibi.

One of the threats is that Libya and Nigeria are exempt from the output cuts and they are predicted to boost their joint output by 1mbpd next year, Khatibi told Trend December 11.

The other threat is that actually no good record exists regarding non-OPEC cooperation with OPEC, as there have been occasions when non-OPEC have failed to enact their decisions, the oil expert said.

However, Khatibi stated that the most important and welcome news is the recent agreement made by the biggest OPEC and non-OPEC producers, namely Saudi Arabia and Russia to cut down their oil output.

This is more important than any other news because the two countries have shown strong political will to commit themselves to the agreement.

OPEC on December 10 persuaded 11 non-members to cut oil production, a move aimed at draining a worldwide oil glut and boosting low prices that have squeezed government finances in Russia and Saudi Arabia.

Officials said that non-members agreed to cut 558,000 barrels per day for six months starting Jan. 1, and that the deal was renewable for another six months after that. The figure was less than the 600,000 barrels a day that OPEC had hoped for.