Baku, Azerbaijan, Dec.20
By Leman Zeynalova – Trend:
Solidarity among OPEC members in 2018 will be even more pivotal, according to Martin Fraenkel, President, S&P Global Platts.
Fraenkel noted in the analysis published on Platts website that factors outside the bloc’s control, such as US shale production will likely determine the success of its efforts to rebalance the oil market, as some predict that the US oil production will exceed that of Saudi in 2018.
“Additionally, the International Energy Agency (IEA) estimates that the world will need 1 million b/d less of OPEC’s oil next year to meet global demand. This could be a further meaningful deterrent to compliance,” said the analysis.
OPEC in 2017 showed discipline with its output deal with 10 non-OPEC countries to cut a combined 1.8 million b/d, noted Fraenkel.
S&P Global Platts' monthly survey of OPEC crude production puts compliance among the 12 OPEC members from January-November at 108 percent.
“But the tide might be turning. With oil prices now 40 percent above mid-2017 levels, several analysts believe compliance could slip in the future if some OPEC members are tempted to overproduce to capture more revenue,” said the analysis.
Earlier, OPEC and several other non-OPEC producers reached an agreement to extend the production deal for a further nine months. This would shift the expiration date of the agreement from March to the end of 2018. The agreement is on the same terms as those agreed in November last year.
IEA said in its December Oil Market Report that OPEC compliance with agreed cuts rose to 115 percent, the highest this year, and lifted the 2017 average to 91 percent.
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