Baku, Azerbaijan, March 27
By Leman Zeynalova – Trend:
It is probably reasonable to expect an extension of OPEC oil output deal to the end of 2017, but at the same level of production cuts, Charles Ellinas, oil market expert, executive president at Cyprus National Hydrocarbons Company (CNHC) told Trend March 27.
However, the expert said he doesn’t believe that the deal will be suspended, adding that it will at least see through its course, i.e. 6 months.
“US shale carries on with its rampant production growth, cancelling any benefits from the OPEC cuts. In such a situation, there is a risk that OPEC may not extend the deal,” said Ellinas.
On the other hand, extending the current deal, but not increasing the level of production cuts is another possibility, according to the expert.
“With shale production increasing unabated, this may keep prices below $50 but not down to $30. That way, OPEC countries are still better off but shale producers are not,” he added.
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.
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