Oil producers check up on landmark deal | 2017-01-22 | daily-sun.com

Oil producers check up on landmark deal

AFP     22nd January, 2017 07:33:34 printer

Oil producers check up on landmark deal

Oil producing countries were meeting Sunday in Vienna to review for the first time progress on implementing a landmark December deal to slash output that is aimed at boosting prices.

The December 10 accord obliges around a dozen nations led by Russia that are outside the Organization of the Petroleum Exporting Countries to reduce output by 558,000 barrels per day (bpd).

At the same time, countries within OPEC agreed to implement a previous accord struck among themselves on November 30 to cut production by 1.2 million bpd from January 1.

The producers hope that this combined 1.8 million bpd will reduce a global glut that has depressed oil prices and battered their public finances, despite being good news for consumers.

The meeting on Sunday at OPEC headquarters was of a new "OPEC Ministerial Monitoring Committee" comprising Kuwait, Algeria, Venezuela from OPEC, and Russia and Oman from outside the cartel.

Also present was Saudi Arabian Energy Minister Khaled al-Falih.

Arriving in Vienna, he said producers have already removed 1.5 million bpd from the market, Bloomberg reported.

Russian Energy Minister Alexander Novak was also upbeat, saying Moscow was "ahead of schedule" and "doing our best to maximise participation" in the agreement, Bloomberg reported.

The deal to cut output marked a dramatic reversal of OPEC's previous Saudi-led strategy of flooding the market to squeeze US shale oil producers, which need a higher oil price to make money.

Markets initially welcomed the accord, sending oil prices up to an 18-month high of $58.

But they have since slipped on concerns that countries may not stick to their commitments -- as has happened under previous deals -- and that higher prices will boost US output.