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OPEC Moves toward Extending Production Quotas on Oil
Saudi Arabia’s energy ministry says the Organization of the Petroleum Exporting Countries is likely to continue the cartel’s oil production quota into the second half of 2017 when the cartel meets next month.
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Saudi Arabia’s energy ministry says the Organization of the Petroleum Exporting Countries is likely to continue the cartel’s oil production quota into the second half of 2017 when the cartel meets next month.
Last November OPEC agreed to begin reducing its combined petroleum production by 1.2 million barrels per day, or 3%, in January. The group also coaxed several other producers, including Russia, to pledge a combined 558,000 pbd in additional cuts.
Minister Khalid al-Falih predicts the agreements will be extended for 3-6 months, Bloomberg News reports. He says OPEC has reached a consensus but has not yet finalized an agreement.
The quotas are aimed at shrinking record-high reserves of stored petroleum, thereby giving OPEC more clout in managing oil prices. Current crude prices are around $53 per barrel compared with about $100 between 2011 and 2014.
Compliance to the quotas has been uneven, and some participant began lowering their output only a few weeks ago. Falih concedes that the OPEC cutbacks haven not yet sufficiently drawn down inventories of stored oil.
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