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OPEC, non-OPEC states unlikely to cancel production cut deal

Business Materials 24 July 2017 14:38
As OPEC and some of non-OPEC oil producers are meeting in Russia to discuss oil market, an Iranian official and an expert told Trend that cancelling the oil production deal is unlikely
OPEC, non-OPEC states unlikely to cancel production cut deal

Baku, Azerbaijan, July 24

By Emil Ilgar – Trend:

As OPEC and some of non-OPEC oil producers are meeting in Russia to discuss the oil market, an Iranian official and an expert told Trend that cancelling the oil production deal is unlikely.

Before, Russia and Kazakhstan have said that they may leave the oil cut deal, however, Russia's energy minister Alexander Novak said on Sunday that Libya and Nigeria were approaching the moment when their output should be capped due to significant rises in recent months, Reuters reported.

Libya has been producing over 1 million bpd, below its capacity of 1.4 million to 1.6 million bpd but near its record high since violence erupted in 2011. Nigeria has also ramped up the output. The two have now increased their output by about 700,000 to 800,000 bpd since the OPEC-led pact was agreed.

According to the deal, OPEC should decrease output by 1.2 mb/d during January 2017-March 2018. Non-OPEC producers also had agreed to decrease output by 558,000 b/d.

Meanwhile, Iranian expert Behzad Ahmadi Nia told Trend July 24 that the discussions are focused on forcing Libya and Nigeria to join the oil cut deal.

An Iranian official, who asked to remain anonymous, also told Trend that regarding the hard fluctuations in oil piece, both OPEC and non-OPEC producers are keen to help market to be established.

“In case some of the obliged nations want to leave the oil cut deal, the prices would plunge,” said the official, adding that “they may even deepen the oil cut volume as well”.

OPEC sources told Reuters on Saturday that Nigeria could cap output if it managed to sustain production at 1.8 million bpd for 90 days. They also said Libya could struggle to sustain output at above 1 million bpd and hence a cap was not needed.

The option of deeper output cuts has so far been ruled out, OPEC sources said. Non-OPEC member Oman's oil minister Mohammed al Rumhy told reporters he saw no need for additional production cuts from OPEC and non-OPEC producers.

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