OPEC/non-OPEC compliance to drop in coming months
Wednesday, October 4The compliance level of OPEC and non-OPEC countries participating in the oil output cut deal is expected to go down in coming months, according to the US JP Morgan analysis.
"OPEC held a ministerial meeting of its OPEC-non-OPEC joint monitoring committee. No decision was reached on the need to propose either an extension or deepening of the agreed cuts. Realistically, we think it likely that the earliest a decision could be made on a further extension of the deal is in November," said the analysis obtained by Trend.
Even so, there will be a further four months of the existing agreement to run at that point, so another deferral on a decision is the most likely outcome, the analysts believe.
"Furthermore, with the peak domestic demand period for many of the Middle Eastern members of OPEC now behind us, we expect to see compliance levels start to ebb away in the coming months. In particular, Saudi Arabian crude burn will likely slip in the coming months, freeing up an incremental 300-400 kbd of crude for export from August levels," said JP Morgan.
OPEC and participating non-OPEC producing countries recorded the highest conformity ever with their voluntary adjustments in production, achieving a level of 116 percent as of August 2017.
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. (Trend.az)