OPEC countries have started to reduce oil production as a part ofagreement – Saudi Arabia, the largest of them, reduced production by almost 0.5 million barrels per day.
Since the beginning of the year, oil prices rose above $ 57 a barrel.
Saudi Arabia, the largest producer of oil, included in OPEC, from the end of October 2016 till the beginning of January has reduced daily production by at least 486 thousand barrels – approximately to 10.058 million barrels per day (4.6%). The Wall Street Journal has stated this on January 5, citing a person familiar with the production level in the kingdom. Thus, the Saudis have fully complied with their obligations to reduce production under the agreement, concluded by authorities of OPEC on the 30th of November 2016 (in total, should reduce daily production by 1.2 million barrels, up to 32.5 million barrels), “If even not more” than was promised, according to the interlocutor of the newspaper RBC Daily.
Oil Ministry of Iraq, which ranked as the second largest oil producer in OPEC after Saudi Arabia, started to reduce oil production, the head of department Jabbar al-Laibi said on January 5. Iraq promised to cut production by 210 thousand barrels (4.5%), up to 4.351 million barrels.
On Wednesday, January 4, another OPEC member, Kuwait, announced that the local company Kuwait Petroleum Corporation also intends to reduce production by 131 thousand barrels under the agreement – up to about 2.75 million barrels per day. The company intends to reduce also oil exports in the first quarter of 2017, reported the Kuwaiti media.
Countries, that are not included in the cartel, but on December 10 joined the agreement also claimed about the beginning of decrease in production – 11 countries have agreed to reduce production approximately by 0.6 million barrels per day, half of them (0.3 million barrels.) is taken over by Russia. So, Oman, extracting 1.01 million barrels per day, from January 1 reduces production by 45 thousand barrels per day (it’s by 5 thousand barrels per day more than planned), said the head of the marketing department of the Ministry of Oil, Ali al-Riyami.
Russia intends to fulfill its commitments to reduce production gradually: till March the production should be reduced by 200 thousand barrels per day, and only at the end of April – by 300 thousand barrels per day, the Minister of Energy, Alexander Novak said in December 2016. At the end of 2016 547,499 million tons of oil and gas condensate were produced in Russia, by 2.5% more than a year earlier. This is a record figure since the collapse of the Soviet Union.
Prices for Brent oil in the news of the reduction of production in OPEC and non-OPEC countries increased from 30 December 2016 till 6 January 2017 by 0.56%, from $ 56.74 to $ 57.06 per barrel.
In 2017 Brent crude oil prices will be volatile as before, it will be traded at the level of $ 40-60 per barrel, the average price will be $ 45 per barrel, according to the annual Moody’s forecast, published on the 3rd of December. Agency experts proclaimed the amount of production and oil reserves in USA, which have not joined the OPEC agreement, as one of the main factors of influence on the level of oil prices. They also indicate that in the first half of the year the price of oil can be stabilized at the level of $ 50 per barrel, subject to agreement on production reduction. However, it will be difficult to control, Moody ‘s experts warn.