BAKU, Azerbaijan, Dec.3
By Leman Zeynalova – Trend:
OPEC is unlikely to increase oil production cuts in the upcoming ministerial meeting, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Markit told Trend.
“The challenges and uncertainties OPEC and their allies, collectively known as OPEC+, face at this week’s meeting in trying to balance the oil market over the next 6-12 months are significant – as they have been since the surge in US crude production tipped the market into over-supply in late 2014. The 1.2 MMb/d voluntary cut over the last year has just about kept Dated Brent above $60/bbl,” he said.
Welch pointed out that the challenges in 2020 are likely to be greater, with more crude oil from the US, Canada, Brazil and the North Sea, even if the US sanctions on Venezuela and Iran remain in place.
“We expect the market over-supply to increase in 2020 and push price down, unless OPEC+ is willing to cut further. Having said that, for this meeting, with oil price in the mid-$60s, I think an increase in the current cut is unlikely. Most likely outcome is to maintain the cut at 1.2 MMb/d, but with a review in 1H20,” he added.
In late 2018, OPEC and a number of countries outside this organization (OPEC+ format) decided to modernize the terms of the agreement on the reduction of oil production, in force from the beginning of 2017. The countries agreed to reduce the total production by 1.2 million barrels per day from the level of October 2018.
On July 2, 2019, a decision was made in Vienna to extend the agreement on reducing oil production by OPEC member and non-member states until the end of the first quarter of 2020.
The 177th Meeting of the OPEC Conference is expected to be held December 5, 2019, followed by the 7th OPEC and non-OPEC Ministerial Meeting on December 6 in Vienna, Austria.
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