Americas News
More Rumours of OPEC Sticking to its Production Cuts as the Cartel Seeks "Very Long Term" Cooperation
Despite worry among some Organization of the Petroleum Exporting Countries (OPEC) members that their crude production cutbacks are only encouraging rival output, five sources familiar with the matter told Reuters that the cartel will likely maintain the cuts for the rest of this year.
One source said achieving a balance between supply and demand in the second half of 2018 was "the most likely scenario, if production, demand, and compliance levels stay as now."
Another source added that "Prices between $60 and $65 can support the continuation of the agreement for the rest of 2018" - however, "a very high price" could cause OPEC to reconsider their commitment.
A predictable number of experts quickly expressed their support for the prospects of OPEC not only continuing its initiative this year but into next, as has been widely suggested: "The potential for OPEC to extend their agreement instead of starting to cut it off at the end of the year is a positive development," said Mark Watkins, investment regional manager at U.S. Bank Wealth Management, adding that "It shows OPEC is serious about continuing to have a stable price for oil."
Watkins would presumably be enthused that Mohammad Barkindo, secretary general for OPEC, is bullish about forging a long-term relationship between his cartel and allies: "We are looking for a very long-term cooperation between OPEC and non-OPEC producing countries," he told told an energy conference in Baghdad.
Barkindo went on to note that a decision on whether to extend cuts beyond 2018 depended on meetings to be held by the exporters by the end of this year; the always-upbeat secretary general also said that investment in the oil industry is increasing as oil prices recover but has not yet reached the level prior to the market's 2014 downturn.
OPEC forging relationships that last in the name of production monitoring has been a favourite media topic for several weeks now; but even though the headline trumpeted OPEC's continued commitment to its crude cutbacks, the content of the Reuters story betrays a considerable clash of sentiment within the cartel's membership, and earlier this month Bijan Zanganeh, oil minister for Iran, summarized the sentiment of many in the dissenting camp by stating that OPEC in June could agree to start easing the curbs in 2019 and that it should aim for oil around $60 to contain the growth of rivals such as U.S. shale.
