The Organization of Petroleum Exporting Countries (OPEC) not only implemented the first joint production reduction plan in eight years, but also extended the deadline for the original production reduction agreement… Today, the OPEC production reduction agreement has achieved its goal, but whoever expected There are even more ambitious “ideals” for oil producing countries!
OPEC production cuts to achieve the goal!
According to Bloomberg, citing people familiar with the matter, OPEC and its allies have already concluded that they are close to eliminating excess supply and that they have achieved a key goal of reducing production ahead of their expectations.
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The report pointed out that compared to the five-year average, the excess crude oil inventories that caused oil price pressure in the past three years have fallen by 97% since January 2017, and the market should achieve rebalancing this season.
All signs are now showing that they will continue to reduce production to further boost oil prices, and may even adjust their targets to provide continued justification for the market.
Informed sources said that the process of rebalancing the market is faster than expected, partly because the reduction in production in some countries exceeds the requirements of the agreement. They said that demand for crude oil is also rising due to the upcoming peak of the summer driving season in the northern hemisphere.
OPECs have more ambitious “ideals”…
According to Bloomberg’s latest news, the three-year excess inventory that caused oil prices to be under pressure has almost completely been cleared. However, some major oil-producing countries have not given a toast to celebrate. Instead, they have found reasons to continue reducing production.
The historic agreement reached before the Organization of Petroleum Exporting Countries (OPEC) and Russia has achieved excellent results and has completed 97% of the inventory overhang target.
However, the Minister of Energy of the State of Saudi Arabia Faleh said that because another important goal – to increase investment in oil and gas production – is still far from being reached, production-limiting measures should continue.
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He said that there is nothing to be feared about as the price of oil rises further from its current three-year high.
Russia’s Energy Minister Alexander Novak, the most important ally of Faleh, also agrees that the initial goal of the agreement—the inventory return to the five-year average—is already within reach, but it does not mean that production must stop. “We have goals, but we don’t have a strict decision formula. For example, ‘they have reached zero, so the task is completed’,” Novak told reporters at the group’s opening ceremony at the Saudi Jeddah meeting on Friday.