Baku, Azerbaijan, Nov.26
By Leman Zeynalova – Trend:
The desire to cut production among OPEC+ members will be less strong than in 2016 due to the higher oil prices and tighter oil supply due into the 2020s, Fitch Solutions Macro Research (a unit of Fitch Group) believes.
The report released by Fitch Solutions shows that market management by OPEC and Russia will heavily influence prices to keep oil above $70 per barrel for Brent.
“OPEC’s renewed leadership in actively managing global oil supply will continue to support prices as reactionary intervention will balance markets. Fiscal breakevens for several OPEC members would be exceeded with oil at $70 with Saudi Arabia balanced at $73 according to the IMF. We believe that targeted prices would range between $70 to $80 to align with these broad measures of a desired price for oil producers,” said the company.
The company analysts believe that diminished spare capacity among OPEC members is an ongoing concern and cuts would lessen the effects of any supply shocks.
Key OPEC member Iran will be hurt as US sanctions bite and higher oil prices fail to compensate for lost production, according to Fitch Solutions’ forecasts.
“The global supply picture (excluding OPEC member countries ) will substantially strengthen in 2019. Oil supplies have been growing rapidly in 2018, as record output from producers such as Russia and the US more than offset losses from Iran and Venezuela. We expect most of global supply growth to be accounted for by non-OPEC countries, which output we forecast to grow from just under 2 million barrels per day over 2019,” said the report.
The Declaration of Cooperation constitutes an unprecedented milestone in the history of the Organization of the Petroleum Exporting Countries (OPEC). For the first time ever, the Member Countries of OPEC coordinated with 11 non-OPEC oil producing countries in a concerted effort to accelerate the stabilization of the global oil market through voluntary production adjustments, which amounted to approximately 1.8 million barrels per day.
The Declaration was an outcome of the Joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting held on 10 December 2016 and was effective for an initial period of six months. The Second Joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting, held on 25 May 2017, decided to extend the voluntary production adjustments for another nine months commencing 1 July 2017. At the third joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting, held on 30 November 2017, it was agreed to amend the Declaration of Cooperation so that it will take effect for the entirety of 2018.
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