US, Iran's oil output unlikely to be as much as expected
Baku, Azerbaijan, Jan.25
By Leman Zeynalova – Trend:
Based on the OPEC-non OPEC deal to freeze the oil production, or maybe even cut a small amount, price increases will be there in the second half of 2017 and later, Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY and SVP MEA-Risk, told Trend Jan.25.
“The oil market is still in a flux, but green leaves are showing on the tree,” said the expert.
During a meeting in Vienna, Austria, on Nov. 30, 2016, OPEC members decided to implement a new production target of 32.5 million barrels per day. Later, non-OPEC countries agreed to cut the output by 558,000 barrels per day during the meeting held Dec. 10, 2016.
Widdershoven pointed out that overall, supply is showing problems, as decline of production is hitting several major producers (Nigeria, Algeria, Venezuela, Brazil, Canada, North Sea) and surprisingly China.
Even if the US shale output grows, it will be not enough to counter decline of production elsewhere, according to the expert.
“Also, expected volumes in Iran will not be as high as market analysts are stating,” he added.
The expert believes that US shale increase also will be lower than expected, as financial sector is not yet willing to go in full to invest the hard needed additional cash to increase volumes.
Regarding the process of implementation of the OPEC output cut deal, Widdershoven noted that at present, compliance is at normal levels.
“OPEC deals always have not reached 100 percent compliance. Still, the willingness of Saudi Arabia, other Arab producers and Russia to keep production at agreed levels will reduce oversupply severely, while other issues will put additional decline of production,” he said.
Also, Saudi Arabia is looking at the Aramco IPO, which will want higher oil prices to get higher levels of interest, added the expert.
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