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Opec To Decrease Oil Output By 1.2m Barrels A Day

13 December, 2018, 06:26 | Author: Lawrence Cooper
  • OPEC decisions aren't shaped by Twitter: Russia

World Oil production is just over 100 million barrels per day, so this is a 1.2% global cut.

The producer club will curb output by 0.8 million barrels per day from January while non-OPEC allies contribute an additional 0.4 million bpd of cuts, Iraqi Oil Minister Thamer Ghadhban said after OPEC concluded two days of talks in Vienna.

OPEC and its partners, which together account for about half of global output, say a glut in the market has led to oil prices falling by more than 30 percent in two months.

Members of the Organization of countries-exporters of oil (OPEC) today, December 6, came to preliminary agreement on the reduction of oil production. However, with prices below $45/bbl in many onshore USA producing basins, a deceleration in US production growth should help achieve this ultimate goal.

Mazrouei, who is also the United Arab Emirates' minister of energy and industry, said the agreement had been a success and shown "positive progress on removing the inventory overhang".

After hitting highs of more than US$52 per barrel in October, the discount on Western Canadian Select bitumen-blend crude versus New York-traded West Texas Intermediate settled at about US$15 per barrel on Friday, according to Net Energy. On Wednesday, he tweeted: "Hopefully OPEC will be keeping oil flows as is, not restricted".

A Russian Energy Ministry source said Moscow was ready to contribute a cut of around 200,000 bpd - more than the initially suggested figure of 150,000 bpd.

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The price of crude has fallen nearly a third since October as Saudi Arabia, Russia and the United Arab Emirates raised output to offset lower exports from Iran. But pouring cold waters on hopes of all oil investors, OPEC ended the meeting without a decision on how much crude should be taken off the market. As the Trump administration prepared this summer to choke Iran with renewed sanctions, including a ban on oil exports, Saudi Arabia and other big oil producers answered the White House's call to open the spigots to avoid nasty price spikes.

Mohamed Azmin said this decision is a testament of Malaysia's commitment to worldwide cooperation in facing economic challenges posed by the global oil market.

OPEC said its decision to cut followed reviews of various reports, including those of its Secretary-General, the Joint Ministerial Monitoring Committee (JMMC), the Joint Technical Committee (JTC), the OPEC Secretariat, and the Economic Commission Board.

Asked about pressure from Trump, Al-Falih said that oil companies in the United States would appreciate the group's efforts. "If they don't get rid of that oversupply, the market will drown in oil", said Antoine Halff of the Center on Global Energy Policy at Columbia University.

Crude futures fell sharply during the previous session, after OPEC was unable to agree on the terms of crude output cuts.

"The commitments made under this proactive collaboration between participating countries are to be voluntarily implemented, non-binding and would not in any way affect the rights of peoples and nations to permanent sovereignty over the exploitation and management of their natural resources", he said. From an initial target of 1.3-1.5m bpd output cut, the final deal was for 1.2m bpd only. The sanctions against Iran, OPEC's third-largest producer, have already significantly reduced its exports.

The price decline prompted OPEC and its allies to discuss output cuts, and Saudi Energy Minister Khalid al-Falih said on Thursday possible reductions by those involved ranged from 0.5-1.5 million bpd.

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