Oil pro­duc­ers com­mit­ted to out­put cut deal, says OPEC

Muscat Daily - - BUSINESS -

Global oil pro­duc­ers said on Tues­day they re­mained com­mit­ted to cut­ting out­put and stem­ming the col­lapse in oil prices, OPEC said.

A tech­ni­cal panel in­clud­ing mem­bers of the Saudi-led car­tel and other oil pro­duc­ers made the state­ment af­ter a two day ses­sion in Abu Dhabi.

Some ex­porters have pro­duced more oil than agreed un­der the Novem­ber deal, rais­ing doubts about OPEC’s abil­ity to en­force it.

OPEC said Iraq, the United Arab Emi­rates and Kaza­khstan - who have lagged in their im­ple­men­ta­tion of a deal to cut pro­duc­tion - af­firmed their com­mit­ment to the ac­cord.

‘All ex­pressed their full sup­port’ for the sys­tem to mon­i­tor the cut­backs ‘in or­der to achieve the goal of reach­ing full con­form­ity’, OPEC said in a state­ment on its web­site. Malaysia also at­tended and made the same pledge.

The meet­ing, co-chaired by Kuwait and Rus­sia, was sched­uled af­ter sev­eral na­tions fal­tered in their pledges to re­duce out­put. Twenty four pro­duc­ers, from among the Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries and be­yond, agreed to cut pro­duc­tion late last year to try to end a global glut.

Oil prices have lost eight per cent this year on con­cern the agree­ment is fail­ing to drain the world’s bloated oil stock­piles. Saudi Ara­bian En­ergy Min­is­ter Khalid al Falih promised last month to in­ten­sify pres­sure on cheat­ing coun­tries.

Iraq and the UAE said at the meet­ing that OPEC’s es­ti­mates of their pro­duc­tion - based on data from ex­ter­nal sources - were at fault for any ap­par­ent fail­ures to com­ply, ac­cord­ing to two peo­ple fa­mil­iar with the mat­ter who asked not to be iden­ti­fied. Iraqi com­pli­ance slumped to 29 per cent in June, its low­est so far, while the UAE made just 60 per cent of its cuts, ac­cord­ing to data from the In­ter­na­tional En- ergy Agency (IEA). Iraq has com­plained that the es­ti­mates OPEC uses to mon­i­tor com­pli­ance are in­ac­cu­rate, and that it has ac­tu­ally made the full re­duc­tion re­quired.

Kaza­khstan, rather than re­duce its out­put as promised, has steadily in­creased it, with the ex­pan­sion of its Kasha­gan oil­field.

OPEC uses sup­ply es­ti­mates com­piled from six ex­ter­nal en­ti­ties, known as se­condary sources, to mon­i­tor ad­her­ence to the deal. Th­ese in­clude me­dia out­lets and in­sti­tu­tions like the Paris-based IEA and the US gov­ern­ment’s En­ergy In­for­ma­tion Ad­min­is­tra­tion.

While the com­mit­tee met, there were fur­ther signs of the diplo­matic push to en­sure full com­pli­ance.

Iraq’s Oil Min­is­ter, Jab­bar al Luaibi, is fly­ing to Saudi Ara­bia at the in­vi­ta­tion of Falih, Iraq’s Oil Min­istry said on Tues­day. The two of­fi­cials will dis­cuss co­or­di­na­tion to achieve OPEC’s goals, Asim Ji­had, a spokesman for the Iraq’s Oil Min­istry, said.

The agree­ment, which came into ef­fect at the start of the year, brings to­gether OPEC and nonOPEC na­tions in an ef­fort to take as much as 1.8mn bar­rels of oil a day off the mar­ket.

Rus­sia and Kuwait are two of the five na­tions that sit on the board that over­sees the im­ple­men­ta­tion of sup­ply curbs. The panel’s con­clu­sions will be dis­cussed when the full tech­ni­cal com­mit­tee next meets, on Au­gust 21 in Vi­enna, OPEC said.

A file photo of the OPEC head­quar­ters in Vi­enna, Aus­tria

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