OPEC, Russia in one million barrels output agreement
Cartel gaining respect and admiration, as it looks for stable oil prices
TBy Kamel Al-Harami
he end result of last Friday’s OPEC agreement, in coordination with the biggest oil producer Russia, was to increase oil production by 700,000 barrels, with Russia increasing production by 300,000 barrels per day, from July 2018.
Iran had been insistent on making no changes to the January 2017 agreement of reduction of 1.8 million barrels.
However, the decision taken in the end was based on the economic factor rather than daily politics.
OPEC has again succeeded in bringing oil producers together and ensuring their main focus is to satisfy the world demand for oil without causing any shortages in the long run. It has become common knowledge that supply is getting tight, and oil producers like Venezuela and Libya simply cannot increase production. Since Iran is facing international sanction, this can affect its supply.
Any increase in the supply should not impact their current and future plans, as they will most likely not comply. On the other hand, Saudi Arabia, Kuwait and the United Arab Emirates have sufficient spare capacity to put more barrels on the waters. Russia is willing and committed to increasing production by more than 300,000 barrels, if there are more demands for its oil.
The results are good despite the earlier refusal by Iran, Iraq and Venezuela to agree on any such increase, particularly the increase of 1.5 million barrels initiated by Russia. However, Saudi’s effort along with the others managed to convince the rest of the OPEC members for smaller cuts while their volume will remain untouched. The most likely outcome is that oil prices will remain in the range of $70. The rest will increase production benefit of such a firm level and gain profit to be deposited in their central banks.
The other satisfactory result of the OPEC meeting on Friday is that the oil organization will meet again in September to review and observe the oil situation and apply any corrections if the oil markets warrant it.
Certainly, OPEC is gaining respect and admiration, as it is now getting closer to its global consumers and looking for stable oil prices, as per the original doctrines concerning its establishment.
In conclusion, $75 per barrel is a good number for all for the time being.