Oil output cuts not enough to bring prices up, says expert

Baku, Azerbaijan, Mar. 14

By Elena Kosolapova – Trend:

Oil output cuts will not be enough to bring prices to a high level, believes Arthur Berman, an independent US geological consultant.

He says a larger issue is the inexorable relationship between stocks and prices.

“In part, this week’s price downturn reflects waning confidence that OPEC production cuts will result in higher prices… There seems to be a growing awareness that global oil markets are incredibly complex, and that there are so many moving parts that a single, simple solution is unlikely,” Berman, who has about 40 years of experience in petroleum exploration and production, told Trend by email March 14.

The expert says the industry for more than two years has believed that higher prices are possible without extreme reductions in inventories.

“Great expectations were placed in an OPEC production cut to rescue the industry from a weak oil market.”

“The fallacy lies in thinking that the problem stems from a simple imbalance between production and consumption and is unrelated to a fragile and debt-dependent global economy. That hope was a dream. It appears that oil markets have woken up from that dream," Berman said.

He noted that the issue is not so much about this week’s change in inventory.

“It is about how much inventory needs to be reduced and how long that will take in the most hopeful scenario.”

According to Berman, if OECD stocks must fall by approximately 550 million barrels to support $70 prices, it will take more than a year to get there if production is cut by 1 million barrels per day.

“If the production-consumption balance fluctuates, it will take even longer,” he noted.

Noting that OPEC and non-OPEC comply with their oil output cut deal reached in late 2016, Berman said early evidence suggests the agreement has resulted in significant production cuts, nearly half of which are borne by Saudi Arabia.

The expert also said the EIA March Short Term Energy Outlook showed a 1 million per day world production minus consumption deficit, noting that one month does not prove a trend.

“For example, August 2016 showed a larger deficit only to be followed by several months of surplus,” Berman said. “But it is a hopeful sign.”

In December 2016, OPEC and non-OPEC producers reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices.

Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 bpd starting from Jan. 1, 2017 for six months, extendable for another six months, to take into account prevailing market conditions and prospects.

OPEC agreed to slash the output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting as much as 486,000 bpd.

According to OPEC Monthly Oil Market Report, world’s oil supply decreased in February by 0.21 million barrels per day compared to January to average 95.88 million barrels per day. In November 2016, world’s oil supply was at 96.84 million barrels per day.

Weekly review of major events in transport sector of Azerbaijan
Weekly review of major events in transport sector of Azerbaijan
Weekly review of developments in Azerbaijan's financial market
Weekly review of developments in Azerbaijan's financial market
Azerbaijan's state service lists criterias for tender transparency
Azerbaijan's state service lists criterias for tender transparency
Loading Bars
Latest
Chinese mainland reports no new locally transmitted COVID-19 cases
Third wave of COVID-19 begins in Tehran
France reports 10,569 new daily COVID-19 cases
Magnitude-6.1 earthquake rattles southern Philippines
Israel reports 4,300 new COVID-19 cases, 30 more deaths
Suspect detained for allegedly sending ricin-tainted letter to White House
Four killed in small plane crash in U.S. Texas
Kuwait reports 385 new COVID-19 cases, 99,434 in total
Biden blasts Trump's plan to push Supreme Court nominee ahead of election
Australia heads for lowest virus count in three months
Iran exploring for new oil and gas fields
5.1-magnitude quake jolts central Turkey
Czech government could declare coronavirus state of emergency, says minister
U.S. sets record with over 1 million coronavirus tests in a day
Turkey records 1,516 new COVID-19 cases
Iran's North-West Railways boosts its revenues
Loans to be issued to enterprises in Iran's Yazd Province
11 Georgian interior ministry employees test positive for coronavirus
Weekly review of major events in transport sector of Azerbaijan
Amount of loans issued by Iranian banks revealed
Kazakhstan considering possibility of creating several new digital products
Weekly review of developments in Azerbaijan's financial market
Africa's COVID-19 cases near 1.4 mln as death toll hits 33,818
Britain is at COVID-19 tipping point, health minister says
22 Thai provinces hard-hit by flash floods due to tropical storm Noul
Production of Iran's Esfahan Steel Company announced
Iran's oil exports process improved
Azerbaijan's state service lists criterias for tender transparency
Uzbekistan's cement import from Turkey more than halves
Azerbaijan's Agroleasing OJSC opens tender to purchase IT equipment
Salehi: There’s no problem for Iran to fulfill its nuclear obligations
Kazakh industrial enterprises switching to best available technologies
Japan's new prime minister Suga, Trump hold first talks by phone
Eurasia Review publishes article on Armenia-Azerbaijan conflict
Georgia’s hotels increase number of served guests
President Ilham Aliyev makes Facebook post on Oil Workers Day (PHOTO)
Export of Azerbaijani products to Belarus increases sixfold
National Iranian Steel Company reveals its production
International Sea Port of Turkmenbashi opens tender for repair of equipment
Bahar Azadi gold coin price again rising in Iran
Turkey’s Ministry of Agriculture opens tender to attract consulting services
Iranian Energy Exchange announces products to be on sale September 21
Kyrgyzstan reports 81 new COVID-19 cases
European tourism industry owners keen on investment in Gorgan tourism sites: Official
Tbilisi joins European Mobility Week
Azerbaijan reports 154 new COVID-19 recoveries
Azerbaijan’s Azersu company opens tender to buy polypropylene fittings
Number of people infected with coronavirus pandemic in Iran exceeds 420,000
Turkish Presidential Administration: Any aggression against Azerbaijan - aggression against Turkey
Russia's COVID-19 cases up 6,148 to 1,103,399
Income growth in Uzbekistan slows down amid COVID-19
Demand for Kazakhstan among Turkish job seekers soars
Value of Iranian mining companies’ shares spike
Kazakhstan's National Bank talks COVID's impact on IT segment, mobile banking in country
128 new COVID-19 infections confirmed in Egypt
Georgia reports 196 new COVID-19 cases
Turkey offers international training on combatting desertification
Eni Turkmenistan Limited opens tender for supply of industrial lube oil
Iran discloses details of cement exports
Azerbaijan’s import of Ukrainian-made products down
First steam unit of Iran's Ferdowsi TPP launched
2 soldiers killed in operation against militants in NW Pakistan
Member of Tbilisi Sakrebulo confirmed with coronavirus
Tehran to host 1st Eurasian exhibition by end of year
Armenia violates ceasefire with Azerbaijan 30 times
Kazakhstan confirms 63 new COVID-19 cases
TikTok hopes three-party agreement between ByteDance, Oracle, Walmart to resolve U.S. concerns
US Department of Commerce postpones TikTok download ban for a week
UNWTO talks ways to restore tourism in Turkmenistan in post-pandemic period
Viola von Cramon: Georgia is moving in right direction, I hope that this tradition will continue at 2020 elections
About 9,000 migrants on Greece's Lesbos move into tent camp after fire
UK's Johnson to levy 10,000 pound fine on COVID-19 rule-breakers
Canadians urged to take action against spread of COVID-19 as caseload reaches 141,911
Death toll from COVID-19 in Brazil over 136,000
UK daily coronavirus cases hit four-month high with 4,422 more cases
Trump says he’s approved Oracle deal for U.S. Tiktok
Iran's Zarif says world should oppose U.S. sanctions or expect same
Rolls-Royce plans to raise up to £2.5 billion as COVID-19 bites
Moscow's death toll from confirmed coronavirus cases rises by 13 - crisis center
Turkey reports 1,538 new COVID-19 cases, 68 deaths
Tajikistan decreases export volumes to Kazakhstan
Police clash with protesters at anti-lockdown demonstration in London
Georgian PM: Our victory must be an economically strong, educated, fair and European state
Iran's Persian Gulf Bid Boland Gas Refining Company declares amount of revenues to be received
Uzbekistan’s car manufacturing company to issue shares for public offering
Trump says he will name Supreme Court successor to liberal Ginsburg 'without delay'
Commander of Azerbaijani Naval Forces comments on information in social networks about Turkish coordinating officer
Gas transportation in Iran expands
Two dead as destructive storm Ianos hits central Greece
Kazakhstan decreases goods export to Ukraine amid COVID-19
Iran and Turkey's gas trade depends on future exploration in the Black Sea
President: If Azerbaijan had been an independent country then, we could have become the richest country in the world
Poland reports over 1,000 new COVID-19 infections, record high since outbreak
CEC sets coronavirus-related safety guidelines for Election Day
China's economy remains resilient despite external risks, says Xi
Iran's Bahar Azadi gold coin price falling
Iranian Energy Exchange announces products to be on sale September 20
Azerbaijani energy minister stresses importance of co-op within OPEC + format
Ukraine becomes popular destination for Turkish citizens looking for job
General Inspection Organization of Iran strengthen monitoring of banks
All news