Baku, Azerbaijan, May 23
By Leman Zeynalova – Trend:
OPEC could actually increase production a little without breaking the promised cuts, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Markit told Trend.
He was commenting on reports saying that OPEC may raise the oil production in June.
“It is certainly possible, some of the OPEC producers ie. Saudi Arabia is actually over-cutting supply compared to what they promised. So OPEC could actually increase production a little without breaking the promise cuts,” added the expert.
He pointed out that Saudi Arabia is currently cutting production by around 100,000 barrels more than they promised. At the same time US crude production is currently increasing by around 1 million b/d each year, said Welch.
“OPEC could take another view that as long as the total production cuts are in line, they are still meeting the overall aim, which would allow others to reduce cuts further, however, as soon as they deviate from the individual country target levels this would be difficult to manage and so is less likely,” noted the expert.
Regarding the oil prices, Welch said they are expected to peak around $85 per barrel in the third quarter of 2018, which is the peak oil demand period, but then ease back below $80 per barrel in 4Q and early 2019.
Earlier, OPEC and oil industry sources familiar with the discussions told Reuters that OPEC may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far.
Gulf OPEC countries are leading the initial talks on when the exporting group can boost oil production to cool the oil market after crude rose above $80 a barrel last week, and how many barrels each member can add, the sources said.
“All options are on the table,” one Gulf oil source told Reuters, adding that a decision to raise output might be taken in June when OPEC next meets to decide on its output policy, but there is no certain number yet by how much the group would need to ease its oil supply curbs.
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.
---
Follow the author on Twitter: @Lyaman_Zeyn