An attendant at a petrol station fills a car’s tank.
Advertisement
This is the first time since 2001 both Opec and non-Opec nations have agreed to curb output, leading to an increase in oil prices.
Al-Falih particularly said that he trusts the word of the Russian Economy Minister Aleksandr Novak and expressed confidence that Russia will comply with the terms of the deal. The IEA monthly report showed global oil supplies surged to 98.2 million barrels a day in the last month, thanks to a rising OPEC production.
Talking aside, according to an OPEC source that had talked to Reuters, Saudi Arabia’s oil production hit a record-high volume in November at 10.72 million bpd, compared to 10.625 million bpd in October.
Some experts forecast the global oil surplus to fall by half from the current glut of 300 million barrels. However, it depends on whether the agreement will hold and how will tight oil production in the USA respond, he added. “The government should be well prepared to deal with such an eventuality”.
US explorers rushed back to the shale patch with the largest weekly addition of oil rigs since July 2015, according to Baker Hughes Inc.
For most of 2016 global oil supply has been running ahead of demand.
The focus of the market will turn now to compliance as historically OPEC and non-OPEC countries have cut far less than promised. Oil-exporting nations have struck two ambitious deals in an attempt to end the overproduction issues of the past two years.
“Ultimately, this remains a short duration cut in our view”, he said.
The report released today predicts that “In 2017, world oil demand growth is seen at 1.15 million barrels a day” partly due to an improving economic landscape.
Total retail fuel sales for the country in the first nine months stood at 626 million litres a day, up 3.1% from the previous year. The deal will cut production with the aim of boosting prices and making production more profitable. The report emphasised that this figure could rise to 50% if crude oil prices remain below United States dollars 55 per barrel.
Advertisement
Saudi Arabia, the de facto head of OPEC, said it potentially has more room for cuts, though other players like Iran and Iraq have said they expect more production, not less. The OPEC and non-OPEC plan encompasses countries that supply 60 per cent of the world’s crude, but excludes major producers such as the U.S., China, Canada and Brazil. If the breakout is sustained, the next objective price move for Brent is at $60, a psychologically-important level, followed by $63, the last support level prior to the down move in the summer of 2015. On the first of this month, the retail price of non-branded petrol was Rs 66.10 per litre in Delhi.
