State-owned Qatar Petroleum said this week that Qatar’s oil production would fall from January 1st in line with last month’s agreement for OPEC members to cut output.
“We have started advising our customers of the expected reductions in oil deliveries to ensure the State’s compliance with OPEC’s allocations,” Qatar Petroleum’s chief executive Saad Sherida al-Kaabi said in a statement.
He said the decision comes in line with Qatar’s commitment to the recently agreed production levels by the members of the Organisation of the Petroleum Exporting Countries (Opec) during its ministerial meeting held on November 30th.
However, the statement did not disclose on the quantum of cut that Qatar would undertake.
While Opec members have agreed to reduce output by 1.2mn bpd, non-Opec countries agreed to cut by 558,000 bpd.
After weeks of hectic parleys, Opec members had inked a pact on a cut in oil production to 32.5mn bpd in early 2017, from an estimated 33.6mn bpd in October 2016.
“This agreement comes from a sense of responsibility from Opec member countries and non-Opec member countries for the general well-being and health of the world economy,” Qatar’s Minister of Energy and Industry Mohamed bin Salah al-Sada had said after the meeting.
Ever since the deal was arrived at, global oil prices have rebounded. The price of Opec basket of 14 crudes stood at $53.24 a barrel on Monday against $50.95 the previous Friday, according to Opec calculations.
In view of the simmering differences earlier among its members on output cut, Opec secretary general Mohamed Barkindo had earlier cautioned that anything short of implementation of the accord could lead to the elongation of the rebalancing process, with further deterioration of financial conditions and setbacks in investments extending into a third year, which would be unprecedented.
“We should be calling for maximum commitment from all Opec and non-Opec countries” he said earlier.
The country allocations and an independent production monitoring committee are also part of the deal, according to which Saudi Arabia is expected to cut production by 486,000 bpd and Iraq by 210,000; while Iran would increase it by 90,000 bpd.
In line with recommendations from the high-level committee of the ‘Algiers Accord’, the November 30 meet also agreed to institutionalise a framework for cooperation between Opec and non-Opec producing countries on a regular and sustainable basis.
According to Opec’s November oil report, world oil demand is expected to increase by 1.23mn bpd in 2016 to average 94.4mn bpd; while supply is expected to contract by 0.78mn bpd.
Expecting annual global oil demand to grow (by an average of 1.2mn barrels a day), Bank of America Merrill Lynch had said “we still see downside risks to our forecast”, keeping its 2017 forecasts for Brent and WTI crude oil unchanged at $61 and $59 per barrel respectively.
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