The oil-producing countries announced Saturday in Vienna a new agreement to reduce production, associating it with the covenant ” limitation recently concluded between the members of the Opec countries outside the organization in order to consolidate the rise in prices. The eleven producing countries that are not members of the Organization of petroleum exporting countries (Opec) are committed to decrease their production of 558.000 barrels per day (bpd), “a historic agreement” announced by the president of the cartel and minister qatari Energy, Mohamed Saleh Al-Sada, at the end of a one-day meeting in Vienna.
Russia will be the most important of these contributors. It had already announced, a week ago, that it would lower its offer of 300,000 bpd. The other countries to participate in the effort will be the Mexico, Kazakhstan, Malaysia, Oman, Azerbaijan, Bahrain, equatorial Guinea, South Sudan, Sudan, and Brunei. The agreement on 558.000 barrels non-Opec, including the breakdown between countries has not been unveiled, is a little behind the goal of 600,000 barrels that had been announced by Opec at the conclusion of its meeting on November 30, but this is the first time in fifteen years that a common commitment of both sides is taken.
In a further signal sent to the markets, Saudi Arabia, the leader and weight-heavy cartel, announced that it would go beyond the promises made a week ago (-486.000 bpd) : “We will cut them substantially below the threshold promised” to 10.06 million bpd, said the saudi minister Khalid al-Falih. After you have flooded the market of”black gold” and caused a meltdown in spectacular prices since 2014, the members of Opec had reached the 30 November to agree on a reduction of their own production of 1.2 million barrels per day, an agreement which has already been qualified as”historical”. Oil prices have resumed color and is in excess of 50 million since the agreement of 30 November.
The cartel said Saturday that he was going to try to convince other producers outside Opec to contribute to this covenant of restriction which will be valid for six months” from the beginning of 2017, but may be renewed. The Russian minister of petroleum, Alexander Novak, has also announced the establishment of a monitoring committee of the agreement, chaired by Kuwait and Russia, involving three oil-producing Opec countries and that the two did not part, a gesture to the attention of skeptics who predict offences against the quotas.
The essentials of the agreement of November 30, is carried by the larger producers in the cartel : Saudi Arabia, Iraq, united arab Emirates, Kuwait, while Iran, Nigeria and Libya have been exempted. On Saturday, Opec has such a brilliant collaboration of Kazakhstan (-20.000 according to Bloomberg) so that this country comes to boost its capabilities with the commissioning of its new deposit giant Kashagan. According to Bloomberg, Mexico will reduce its production of 100,000 bpd, Oman 40,000 and Azerbaijan 35,000.
This new round of talks in Vienna was also the occasion for Moscow to reassure on its commitment to a reduction of the extraction is applicable to a production level historically high, from 11.2 million barrels per day this fall, which, according to analysts, puts into perspective the scope of the proposed effort.
And the United States ?
The Russian authorities had said on Wednesday “the support” of the private oil companies, but did not provide details on its practical modalities. Moscow, whose finances have been sealed by the fall of course, has a priori any interest in a lasting rebound of course, which would give Vladimir Putin the margin of manoeuvre of budgetary non-negligible at a little over a year of the presidential election.
analysts also question the temptation for the producers to “make up” declines in natural, related to the depletion of some deposits and already included in the forecast, so make the switch to voluntary reductions.
the Leader of the cartel, Saudi Arabia had long supported a policy of low prices, hoping to oust the competitors from the Opec, particularly producers of oil shale in the us. But the fall had ended up affecting this rich pétromonarchie, the incentive to change strategy. The producers play a part tight to find the “fair price” : heralding a marked reduction in their offer, they are likely to open a breach in which could engulf the american producers, already encouraged by the stance adopted by the future president Donald Trump.