Baku, Azerbaijan, Jan.16
By Leman Zeynalova – Trend:
Proof of cuts to oil production by OPEC and non-OPEC countries, or the lack thereof, will likely only become available in February, according to the analysis of the US JP Morgan bank.
“Three OPEC members – Saudi Arabia, Kuwait and Algeria – have reportedly cut production below the level required by the November agreement,” said JP Morgan. “Arguably these states were crucial to the negotiations that forged the deal last year and are keen to demonstrate not just compliance but production cuts that go beyond the agreed level.”
Notably, JP Morgan Emerging Markets research estimates that Saudi Arabia has the fiscal capacity to lower production beyond that which was agreed with OPEC in November for 2017.
“More broadly, comments from producers, both within OPEC and those countries that have committed to concurrent production cuts, indicate that progress is being made to reduce output in line with our expectations,” said the analysts.
On Jan.21-22, there will be the first meeting of the monitoring committee in Vienna and JP Morgan expects the focus of the meeting will be to assess what additional measures of oversight are needed, and or possible, to supplement reporting by national governments, rather than assessing the actual level of production.
During the Vienna meeting held Nov.30, OPEC members decided to implement a new OPEC-14 production target of 32.5 million barrels per day.
It was also decided to establish a High-level Monitoring Committee, consisting of oil ministers, and assisted by the OPEC Secretariat, to monitor the implementation of the agreement.
Later, non-OPEC countries agreed to cut the oil output by 558,000 barrels per day during the meeting held Dec.10.
Eleven non-OPEC countries agreed to reduce the oil output: Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and Republic of South Sudan.
OPEC and non-OPEC countries pledged to implement the reached deal from Jan.1, 2017.
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