OPEC, NON-OPEC oil output cut compliance hits record
The OPEC-Non-OPEC producing countries that last year agreed to a deal to keep the oil production limited to stabilize oil prices are delivering more than promised, the Joint Ministerial Monitoring Committee (JMMC) said on Friday.
According to JMMC, for the month of September 2017, OPEC and participating Non-OPEC producing countries achieved a record high conformity level with the voluntary production adjustments, reaching 120%.
“In September 2017, the OPEC and participating non-OPEC producing countries achieved an excellent conformity level of 120%, the highest level since the start of the Declaration of Cooperation. This again underscores the resolute commitment of participating producing countries to cooperate towards the rebalancing of the market.” JMMC said.
Worth noting, the JMMC pointed out that some participating producing countries have consistently performed beyond their voluntary production adjustments, others are yet to achieve 100% conformity.
According to Bloomberg calculations, Non-Opec nations have delivered 119% of their pledged cuts in September, however, Opec’s compliance stood at 97% in the same month, as Iraq and U.A.E failed to meet the target.
159 million barrels overhang, all options open
The JMMC took note of the recent developments in the market and expressed confidence that the oil market is moving in the right direction towards the objectives of the Declaration of Cooperation. Indicative of these positive developments are the recent upward revisions for global oil demand growth in both 2017 and 2018, the committe said.
The committee said that commercial oil stocks in the OECD fell further in September and the difference to the latest five-year average has been reduced by 178 million barrels since the beginning of this year, however, there remains another 159 million barrels of stock overhang to be depleted.
The JMMC said it would continue to monitor other factors in the oil market and their influence on the ongoing market rebalancing process.
“All options are left open to ensure that every effort is made to rebalance the market for the benefit of all,” JMMC said.
To remind, the joint committee was established following a deal struck by OPEC and some non-OPEC nations in December 2016 to accelerate the stabilization of the global oil market through voluntary adjustments in total production of around 1.8 million barrels per day.
The resulting Declaration, which came into effect on 1 January 2017, was for six months. The second joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting, held on 25 May 2017, decided to extend the voluntary production adjustments for another nine months starting1 July 2017.
Worth noting, Vladimir Putin, president of Russia, a country which is part of the production cut deal, is not ruling out a possible further extension of the agreement between OPEC and Non-Opec nations to cut oil production once the deal expires in March 2018.
He last month said that if a decision is made whether to extend, the extension would last at least until the end of 2018.