Khobar- Former OPEC analyst says that arriving to a swift agreement between oil giants on production is expected to be a far-reach. But Brent is expected to reach an internationally settled rate ranging $40-$50 per barrel.
Dr. Hasan M. Qabazard, former Director of OPEC’s Research Division(2006-2013), says that he is not particularly optimistic on non-OPEC members joining the Algeria agreement brokered and endorsed by OPEC.
OPEC agreed during its the 15th International Energy Forum Ministerial (IEF15) in Algiers to reduce its oil output to 32.5 million bpd from the current production levels of around 33.24 million bpd.
The producing group will agree concrete levels of production by each country at its next formal meeting in November. Once production targets are reached, OPEC will reach out to non-OPEC producers for cooperation.
“I’m not overly optimistic on OPEC producers and non-OPEC members to reach a realistic agreement that would be implemented—many promises were made before, I personally had attended them; they included Russia, Mexico and Azerbaijan but at the end no one cut production ” Dr. Qabazard told Asharq Al-Awsat.
The former OPEC researcher said that during his time serving from 2006-2013, many non-OPEC producers projected undertakings but did not follow through with them.
“When OPEC carried out the 2008 cut, taking off around 3.5 mln bpd, which was decided on during the historical Oran meeting, Russia promised a 400,000 bpd cut, and Azerbaijan a 150,000 bpd cut, but neither upheld their undertaking,” added Dr. Qabazard.
The oil market suffers a grave disproportion between supply and demand since 2014, the destabilization has caused a record-breaking surplus in supply. The oversupply led to a market saturation which in turn capsized rates from a $115 per barrel in 2014 to an all-time-low of $27 in January 2016. Since the drop rates made a fair recovery, reaching $50 per barrel on cut predictions.