The historic agreement in Vienna on Tuesday aimed at ensuring Iran does not obtain a nuclear bomb, and which paves the way for the removal of sanctions and the gradual return of Iranian oil to the global market next year.
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Global oil demand will accelerate next year, to 1.34 million barrels a day, compared with 1.28 million in 2015, led by rising consumption in emerging economies, according to the report.
“If production from non-Opec slows down as expected and at same time demand continues growing next year, assuming that Iraq doesn’t increase big and Libya is not going to come back, then the market will absorb the Iranian oil”, a senior Gulf Opec delegate told Reuters.
Russian Federation and Saudi Arabia had agreed at the meeting that deliberate oil production cuts are unnecessary as the market will regulate prices itself, Novak said.
OPEC kingpin Saudi Arabia, in a strategy designed to squeeze out rivals, such as USA shale oil firms, has been reluctant to cut oil output in order to support prices. Benchmark United States crude dipped 54 cents Monday to settle at $52.20 a barrel on the New York Mercantile Exchange.
Previously this week Fitch reported that it expects oil extraction fall in Russia in 2016 due to the European Union and United States sanctions that have restricted the access to the worldwide financial resources to Russian producers of raw materials as well as due to low prices in the world hydrocarbons market.
“So it could be a contentious (Opec) meeting and there could be pressure for an emergency meeting before December”. “The real problem starts when Opec members begin to fight for quotas amid oversupply and market share disputes”, said Jassem al-Saadun, head of Kuwait’s Al-Shall Economic Consultants.
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“The prices will be determined by the production costs of shale oil”, Novak said.
