Baku, Azerbaijan, Oct.6
By Leman Zeynalova – Trend:
OPEC compliance with the oil output cut deal is expected to rise in the short term, as domestic demand subsides amongst Gulf Cooperation Council (GCC) producers, said the report from BMI Research, (a Fitch Group company).
“Russia will likely increase its production over Q4 2017, although is currently producing below its quota. In West Africa and the North Sea, lighter loading schedules will help to tighten the physical market in November, but will be partly offset by a higher volume of exports from the US,” said the report obtained by Trend.
However, in the long term, for 2018 BMI Research expects that the OPEC, non-OPEC production cut deal will be rolled over to the end of Q2. Demand is seasonally weak in Q1 and the market will be better able to absorb the additional barrels over summer, the analysts believe.
“The return of cut barrels will pressure the market. However, it is our belief that the pace of return will be softer than anticipated. A substantial share of the barrels 'cut' were the result of natural decline and will not be recovered,” said the company.
Venezuela in particular has suffered heavy losses and BMI Research expects this trend to continue into 2018.
“The actions of Saudi Arabia will also be critical. Our forecast assumes restrained production growth from the kingdom next year, as it attempts to maintain a level of control over prices,” said the report.
On May 25, OPEC member countries and non-OPEC parties, Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and the Republic of South Sudan agreed to extend the production adjustments for a further period of nine months, with effect from July 1, 2017.
The reductions will be on the same terms as those agreed in November.
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