Baku, Azerbaijan, August 10
By Leman Zeynalova – Trend:
It will always be tricky to achieve a high-level compliance to the oil output cut agreement reached by OPEC and some non-OPEC countries, Sijbren de Jong, analyst at The Hague Center for Strategic Studies and expert in energy security told Trend Aug.10.
“You are in a situation whereby a lot of OPEC countries could really use the additional revenue, but are not eager to cut down production in the short term, as they know that will financially hurt them,” he said.
According to the latest OPEC’s assessment, the participating OPEC and non-OPEC producing countries achieved a conformity level of 98 percent in June 2017.
On May 25, OPEC member countries and non-OPEC parties, Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and the Republic of South Sudan agreed to extend the production adjustments for a further period of nine months, with effect from July 1, 2017.
The reductions will be on the same terms as those agreed in November.
Sijbren de Jong believes that it will take more time to achieve a balance in the oil market.
“The real question is whether US shale will again grow as soon as prices pick up a bit more. That is still the 'big if' hanging over the market,” he added.
The US Energy Information Administration (EIA) said in its August Short-Term Energy Outlook that domestic output in the US will average 9.91 million barrels per day in 2018. For 2017, domestic production is seen at 9.35 million barrels per day, up from 9.33 million in the July outlook. Global production is forecast at 100.21 million barrels per day in 2018, compared to 100.20 million barrels per day estimated in July.
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