Opec Production Purgatory: Cuts And More Cuts With No End In Sight

5 Jul 2019 Issue: 62 / 27 By: Jamie Ingram

Opec is stuck in production purgatory. This week saw the group extend its production cuts into a fourth year, and the current market outlook indicates that a further extension will be required. While the production cuts are succeeding in propping up prices, Opec is paying a heavy price: market share.

In the end, the 24-member Opec+ coalition agreed on 2 July to extend its 1.2mn b/d production cuts by nine months to 31 March 2021. “The commitment to a nine-month extension is unequivocal, very solid, very strong,” Saudi Energy Minister Khalid al-Falih said. This is a far cry from January, when Mr Falih said the market imbalance was less severe than many perceived: “I just can’t see it taking a long time [to fix]” (MEES, 18 January).

The Saudi minister added that “as high as the collective conformity has been for the first half of the year… the second half is going to be different,” as he voiced confidence that countries such as Iraq and Nigeria would improve their compliance. (CONTINUED - 1904 WORDS)