Opec: an agreement “historic” found to the general surprise – Boursorama

Opec Meeting, on 28 September 2016 in Algiers ( AFP / Riyadh Kramdi )

Opec Meeting, on the 28th September 2016 in Algiers ( AFP / Riyadh Kramdi )

At the end of a meeting of nearly six hours and several weeks of talks, Opec announced that it had decided to bring its production to a level of 32.5 to 33 million barrels per day, compared 33,47 mbd in August, according to the international Energy Agency (IEA).

This is the largest reduction in production from that decided after the fall of the current during the 2008 crisis.

“It was a very long meeting, but historic,” said the minister qatari Energy and the chairman of the meeting, Mohamed Saleh Al-Sada, during a press conference.

Although the market is showing “positive signs”, with in particular a decline of inventory and a demand resistant, “we need to accelerate the rebalancing of the market”, he added.

- Russia -

The modalities of implementation of this agreement will be discussed at the summit of the Opec in Vienna, on November 30.

A high-level committee will be put in place to determine the levels of production that can be applied to each of the countries.

It will also engage in dialogue with non-member countries, mainly Russia, the world’s second largest producer of crude oil, to participate in the efforts of rebalancing.

Moscow has already said it was in favour of a freeze of its production to the record level of September.

“today, Opec has just taken a historic decision”, was welcomed by the algerian minister of Energy, Noureddine Boutarfa. “Opec returns to its monitoring function of the market. It is a function it had lost for several years.”

participants of an informal meeting of Opec, the 28th September 2016 in Algiers ( AFP / STRINGER )

“This is a decision unanimously, and without reservation, that has been taken,” he added, specifying that the informal meeting had been transformed into extraordinary session to enable a decision to be made.

the Face of the boom of the oil shale in the united states, the cartel of 14 countries had abandoned its role of regulator of the market to adopt a strategy of defending market share, by opening the bottom valves at the expense of price.

The targeted production level by the Opec is also roughly the number of barrels that were pumped last march, the cartel’s oil (32,47 mbd), according to the figures of the IEA.

The reduction, however, remains below the increase in production observed over one year within the Organization: in August, the cartel pumped 930.000 barrels over a year.

nevertheless, this news immediately makes it fly, the price of crude oil of 5%, whereas the markets had been expecting the opposite of what the Algiers meeting leads to a disagreement.

Yet, say analysts, such an agreement does not change the fundamentals of the market.

“Even if an agreement was reached, it would be inadequate to sustain prices beyond a temporary increase due to a positive feeling”, writes the economic analysis group Capital Economics in a note published before the agreement.

The analysts of BMO Capital Markets noted that the production quotas established by Opec has not always been respected by its members.

- Concession for saudi -

analysts believed an agreement even more unlikely that on the eve of the meeting, saudi Arabia and Iran, the major rival in the Middle East, had said to doubt the possibility of finding a ground of agreement.

Their rivalry had already killed a previous attempt of gel concerted in April, in Doha.

But minister of qatar has assured that the meeting was held in “a very positive atmosphere, reflecting the strong consistency of the Opec”.

iran’s minister of Oil, Bijan Namdar Zanganeh, said he is “very happy”.

He had repeated that Tehran was to restore production levels seen prior to the international sanctions related to its nuclear programme, or about 4 million barrels per day (mbd), or even a little more, compared to 3.6 mbd today.

saudi Arabia, the largest producer of Opec, conditioned in a first time any reduction of its production to a similar extent to that of its peers.

But It did eventually soften its position, affected economically as the other by the descent of the streams, which have lost more than half their value.

The powerful saudi minister of Energy, Khaled al-Faleh, had said on Tuesday evening that his country would consent to Iran, but also Libya and Nigeria, should be allowed to “produce the maximum levels that make sense.”

These last two countries, weakened by internal conflicts, to pump currently far below their capacity and did not want to renounce exports generating foreign currency.

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