Following today’s announcement that participants at the 174th Meeting of the OPEC Conference in Vienna have collectively agreed to increase production to 100% of targeted cuts,
Joseph Gatdula, Senior Analyst for Oil & Gas at GlobalData, a leading data and analytics company offers his view on what this means for the industry:
‘‘The historic OPEC agreement from late 2016 to curb production has recently exceeded targeted compliance by 152%. Today’s pledge to meet 100% compliance is an attempt by OPEC to address concerns of an undersupply scenario in which oil price increases to levels that would hinder global growth. The magnitude of production increase would decrease the undersupply, however decline rates at existing fields, and slower than expected growth in US production should leave room for more production increases.
‘‘GlobalData estimates OPEC production should increase by a minimum of 600,000 barrels per day to match targeted cuts. This follows earlier reports of a one million barrel production increase which was strongly opposed by Iran. In consultation with Saudi Arabia a compromise was agreed with partners including Iran whose ability to increase production would be curtailed by the recently imposed US sanctions. OPEC production levels would be reassessed again at the end of 2018.
“The inability of certain OPEC members to raise production will undoubtedly mean the bulk of production increases will be met by the largest producers, though the distribution of increases between members remains unclear.”