Extension of OPEC deal inevitable – expert
Baku, Azerbaijan, May 19
By Leman Zeynalova – Trend:
It is almost inevitable that the OPEC oil output cut deal will be extended, Gal Luft, co-director of the Institute for the Analysis of Global Security (IAGS), a Washington based think tank focused on energy security, and a senior adviser to the US Energy Security Council, told Trend May 19.
“The deal has not achieved the desired outcome and requires a second shot in the arm,” he added.
Regarding the possibility of objection of some countries to the extension, the expert noted that this is unlikely for several reasons.
“OPEC members realize that US oil production and rig count are rising again while demand is sluggish. Libyan production has surpassed 700,000 barrels per day and is rising. With this picture, I cannot see any producer that will object the extension,” said Luft.
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 barrels per day starting from Jan. 1, 2017 for six months, extendable for another six months.
OPEC agreed to slash the output by 1.2 million barrels per day from Jan. 1.
Russia and Saudi Arabia earlier said that they will propose during the OPEC meeting to be held May 24-25 the extension of the oil output deal by nine months.
The two countries agreed to do whatever it takes to achieve the desired goal of stabilizing the market and reducing commercial oil inventories to their 5 year average level, as well as to underscore the determination of oil producers to ensure market stability, predictability and sustainable development – the joint actions of the participating producers should be extended by 9 months, through March 31, 2018.
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