OPEC+ leans towards renewing output deal
Baku, Azerbaijan, May 23
By Leman Zeynalova – Trend:
Even if OPEC+ deal is reached at June’s meeting to cap oil output for the remainder of this year, it is unlikely involve some increase in the group’s quota,Trend reports citing the UK-based Capital Economics economic research consultancy.
“There were strong hints from last weekend’s meeting of OPEC+ energy ministers that the group will extend its oil output agreement in some form into the second half of this year, supporting our view that the slowdown in economic growth in the Gulf has further to run. It was not a surprise that the meeting ended without a firm commitment to action given the uncertainty hanging over the oil market, particularly in relation to Iranian oil production,” reads a report from the company.
“Even if a deal is reached at June’s meeting to cap oil output for the remainder of this year, we suspect that this could involve some increase in the group’s quota. But what matters from the perspective of GDP growth is the year-on-year change in oil output.”
The murmurings from OPEC+ are that, if the group does decide to raise oil output, it is likely to take a gradual approach, Capital Economics believes.
“The upshot is that the drag on GDP growth in the Gulf from oil sectors still looks set to intensify over the rest of this year. This is a key reason why we think that these economies will perform worse than the consensus anticipates.”
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. The sustainable oil market stability sought by the Declaration is in the interests of producers, consumers, investors and the global economy at large. 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.
The core principles of transparency, equity and fairness which have underpinned the Declaration of Cooperation infuse all aspects of OPEC’s interactions with its non-OPEC oil producing partners, including cooperation at a research and technical level.
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