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Biggest drags on OPEC compliance

Oil&Gas Materials 21 August 2017 11:34 (UTC +04:00)

Baku, Azerbaijan, Aug.21

By Leman Zeynalova – Trend:

Volumetrically, the biggest drags on compliance remain Iraq and the United Arab Emirates (UAE), both of whom have struggled to reach their respective targets on average in the first half of 2017 and in July, according to the US JP Morgan analysis.

“Fresh on the heels of Iraq’s commitment to better enforce its compliance with the agreed production cuts that would peg output at 4.35 million barrels per day (mbd) in the second half of 2017, Ecuador has partially recanted on its earlier disavowal of agreed product cuts,” said the analysis obtained by Trend.

Ecuadorian output declined from 550,000 barrels per day in the second half of 2016 to an average of 528,000 barrels per day in the first half of 2017, said the JP Morgan analysts, adding that this fell short of their target of 522,000 barrels per day, implying compliance of 75 percent.

“However, in July Ecuador announced it was abandoning its OPEC commitments and pledged to raise production back to full output. We estimate July output was 539,000 barrels per day,” said the analysis. “Following discussions with OPEC officials this month Ecuador is now signaling that it will limit output to 541,000 barrels per day. This effectively would peg compliance with the OPEC agreement at just 27 percent.”

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.

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