OPECĒs decrease in production will be lower and actual reduction could be as low as 700,000 barrels

OPECĒs decrease in production will be lower and actual reduction could be as low as 700,000 barrels
OPECĒs decrease in production will be lower and actual reduction could be as low as 700,000 barrels
Tuesday January 3, 2017

The integrity of OPEC will be tested this January due to the agreement of the output reduction, while many analysts say that full compliance among participants is simply not in the cards.

An Analyst reported that the first month of implementation will reveal if every member will abode by the deal to reduce the production by a total of 1.8 million barrels per day, but instead of full compliance, is expected an 80 percent buy in. Another analyst claims that 70 percent compliance is more likely and that this could result in a total cut as little as 700,000 barrels per day. Whereas another source says that it’s inevitable - somebody's going to cheat. It has been proved historically that OPEC always blows past its targets.

Yet another naysayer believes that Russia will not comply as promised by reducing production by 600,000 barrels per day in the New Year. And this is based on the statement of the energy minister for Russia that his country would examine the cuts within technical parameters. Which this means that Russians were planning to raise production by 300,000 barrels in the first half of next year, but now they can’t do it; Q.E.D., that's their contribution.

Finally another analyst added that even if the Russians were truly intent on cutting output, "it’s difficult to see how they would get the [production] companies to do it – it’s not like an OPEC structure whereby the company takes instructions from up high.

Earlier this week some analysts foresee oil prices as increasing to a modest $60 per barrel by the end of next year; the forecast was based on the possibility of OPEC members cheating on their reduction obligations; a stronger U.S. dollar; and a likely recovery in U.S. oil output.


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