Baku, Azerbaijan, Dec.12
By Leman Zeynalova – Trend:
The recent decision of OPEC and some non-OPEC countries to cut the oil output will ensure a balance in supply and demand, Trend reports citing the Short-Term Energy Outlook (STEO) of the US Energy Information Administration (EIA).
“On December 7, the Organization of the Petroleum Exporting Countries (OPEC) and several non-OPEC countries announced a production reduction of 1.2 million barrels per day (b/d) from their October production levels for six months beginning in January 2019. The cuts were in response to increasing evidence that oil markets could become oversupplied in 2019. This potential oversupply was reflected in recent price declines,” said the report.
EIA expects that the magnitude of the recent price declines combined with the OPEC production cuts will bring 2019 supply and demand numbers largely into balance, which EIA forecasts will keep prices near current levels in the coming months.
Moreover, EIA forecasts the liquid fuels production in OPEC will decline by 0.9 million b/d in 2019.
The 5th OPEC and non-OPEC Ministerial Meeting was held in Vienna, Austria, on December 7, 2018.
The meeting participants decided to adjust the overall production by 1.2 million barrels per day, effective as of January 2019 for an initial period of six months. The contributions from OPEC and the voluntary contributions from non-OPEC participating countries of the ‘Declaration of Cooperation’ will correspond to 0.8 million barrels per day (2.5 percent), and 0.4 million barrels per day (2 percent), respectively.
OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.
Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1, 2017.
OPEC and its partners decided to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.
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