Extending Oil Output Cuts Will Stabilise Prices, Says Putin
- Author: Zachary Reyes May 27, 2017,
May 27, 2017, 22:52
Brent crude is still about $3 per barrel below where it started the year and about 7 percent below the late February peak. They will present their position at a meeting of OPEC and other nations on May 25 in Vienna.
However, the U.S. is not included and its high output could undermine efforts.
The energy ministers of OPEC kingpin Saudi Arabia and its biggest non-OPEC partner Russian Federation met Monday and agreed to do "whatever it takes to achieve the desired goal of stabilizing the market", Russia's energy ministry said in a statement.
The agreement needs to be extended as we will not reach the desired inventory level by end of June.
The two countries produce 20 million barrels of crude oil a day - about one-fifth of global consumption - and other oil-producing nations are expected to follow their lead over cuts.
"These combined volumes could largely offset the benefit of the extended cuts", Goldman Sachs said, keeping its average Brent price forecast for the third quarter of 2017 at $57 per barrel.
Kuwait committed to cutting its output by 131,000 b/d to 2.707 million b/d in January under the OPEC agreement.
A central part of their problem is the USA shale oil business and the competition to the established industry it has come to represent in the past decade.
"I think it will be 3-5 new countries", Novak said.
Nigerian crude oil and condensate production is now ranging between 1.9 million and 2 million b/d and could soon reach close to 2.2 million b/d, once Forcados comes back online, sources close to the matter said.
The cut hasn't really worked.
Then in December, non-OPEC producers led by Russian Federation agreed to cut their own output to 558,000 barrels per day.
The IEA boosted its outlook for non-OPEC production growth this year by about 100,000 barrels a day to 600,000 a day.
Thanks to a relentless rise in drilling activity, mostly from shale producers, USA oil output has shot up by more than 10 percent since mid-2016 to over 9.3 million bpd.
While Russia and the Saudis cooperate in their effort to cut production, both are engaged in stiff competition to be the biggest supplier of crude to China, which is the world's fastest growing oil market and is challenging the United States as the biggest importer.
"On the negative side, we are still concerned about this news". The cuts were agreed by OPEC in November of last year and represented the first agreement of its kind in eight years, in an attempt to curb the oil rout caused by excessive oversupply.