Khalid al-Falih today said that Oil output cuts are definitely going to take its place till march 2018; Global Production cuts are going to recover Oil market in further 5 years. As it is planned. The aim of OPEC and non-OPEC allies is to curb the outputs and lift the Oil prices, in order to achieve rebalance in the ”healthiest” way. This way Oil inventories will be reduced, which leads producing countries closer to their goal:
“We believe that continuation with the same level of cuts, plus eventually adding one or two small producers … will be more than adequate to bring the five-year balance to where they need to be by the end of the first quarter 2018.” (Khalid al-Falih, Ryadh)
OPEC’s idea is to conduct the global oil inventories in next 5 years.
Non-OPEC Russia, and The OPEC countries along with the other producers originally made a deal to curb outputs by 1.8 million bpd. Starting January the first, and taking place at least next 6 months. Now is the 5th month of previously mentioned cuts, and the global aim is to rebalance the market by prolonging them.
Following the simple laws of economy, the oil prices have gained backup from curbed outputs.
In a meeting of Saudi Arabia and Russia previously this month, the two main producing countries agreed that these further cuts are going to be of a huge value for global Oil supply. Also, market sometimes needs a hand of help in order to function effectively.
The subject of deepening the Cuts was also mentioned. All of this in order to drain inventories and give some decent back up to the Oil prices.
For those familiar with the subject, it is clear that OPEC organization has huge power in its hands. And a long-time positive branding scale, which gives it credibility and possibility to conduct the Oil market movements.
The Economic Commission Board is the panel which precedes the May 25th and the main OPEC meeting. It serves for all the possible options to be discussed, and that way to bring the pre-final-decisions, for scheduled May 25th.
Sources say that the Exact amount of discussed deeper output cuts was not mentioned. Some countries allies did not receive the news about the deeper cuts so likely. But it is actual subject which will be considered in a final meeting, and it also may impact the market.
OPEC is asking some other Oil producing countries to join the current deals. To enter the supply pact and together make the bigger impact on prices. Turkmenistan, Egypt, as well as the Ivory Coast agreed to attend the meeting on May 25th.
The conclusion is pretty clear. Oil output cuts are willy-nilly going to take place after the meeting. That way, global Oil prices are going to gain support and help the 5-year plans; aiming to rebalance the market.