OPEC: "Commitment Of Algeria, Iraq, UAE To Production Cuts Is Weak"

date 2017/08/11 views 356 comments 0

icon-writer S.A/English version: Dalila Henache

OPEC said that the oil demand will grow faster than expected this year, helping to reduce oversupply, despite the rising of crude production in North America, and OPEC's low commitment to production cuts.

OPEC revised its expectations for the demand growth in 2017 to 1.5 million bpd, compared with 1.4 million barrels per day in its previous monthly report, and indicated that it expected the demand to grow by an additional 1.4 million bpd next year.

"Producers have to be encouraged in demand, which is growing on an annualized basis at a faster pace than originally expected", the Paris-based energy agency added.

"Confidence will be strengthened that the restoration of balance will continue, if some producers who are involved in production agreements do not show signs of weakness as they strengthen their positions", the agency, which advises industrialized countries on energy policy, asserted.

Organization of the Petroleum Exporting Countries (OPEC) is cutting output to about 1.2 million bpd, while Russia and other producers outside the organization are cutting production to 600,000 barrels per day until March 2018 to support oil prices.

"OPEC's commitment to cuts has fallen to 75% in last July, which is the lowest since the start of production cuts earlier this year", the agency explained.

OPEC noted to the weak compliance of Algeria, Iraq and the United Arab Emirates to production cuts, although Algeria is the actual architect of the agreement, which raises questions about the credibility of the report.

In addition, Libya, the OPEC member state that is currently exempted from cuts, has recorded a sharp increase in production.

Crude oil producers are expected to grow by 0.7 million barrels per day (bpd) in 2017 and by 1.4 million bpd in 2018, driven by strong production increases in the United States that participate in the cuts.

Strength of global demand growth is helping to get rid of excess crude, and the International Energy Agency (IEA) has revealed a decline in stocks in the industrialized nations in June and July.

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