OPEC Secretary General Mohammad Barkindo said to reach the proposed cut of 1.2 million barrels per day (bpd), the effective reduction for member countries would need to be 3.02 percent. That is higher than the initially discussed 2.5 percent discussed earlier this month. Since climbing to four-year highs in early October, crude futures have crashed by more than a third.
Heightened concerns of oversupply, reports of swelling inventories, forecasts of record U.S. and Russian output and intensifying concerns about a slowing global economy have all placed downward pressure on the value of a barrel of oil. OPEC is reportedly planning to release a table detailing voluntary supply cut quotas among its members and allies, Reuters reported Thursday, as the influential oil cartel steps up its efforts to put a halt to one of the biggest oil price falls in years.
OPEC Secretary General Mohammad Barkindo said to reach the proposed cut of 1.2 million barrels per day (bpd), the effective reduction for member countries would need to be 3.02 percent. That is higher than the initially discussed 2.5 percent discussed earlier this month. “In the interests of openness and transparency, and to support market sentiment and confidence, it is vital to make these production adjustments publicly available,” Barkindo reportedly told OPEC members in the letter.
“I would urge Your Excellencies to kindly make positive announcements reinstating your countries’ commitment to implementing the agreed decisions. This is also vital to underpin trust in our decisions and to buttress ourselves from any naysayers who may doubt our commitment. Since climbing to four-year highs in early October, crude futures have crashed by more than a third. The latest wave of heavy selling comes at a time when the energy market as well as the global economy is gripped by a flurry of bearish factors.
Heightened concerns of oversupply, reports of swelling inventories, forecasts of record U.S. and Russian output and intensifying concerns about an economic slowdown have all placed downward pressure on the value of a barrel of oil. International benchmark Brent crude traded at around $55.43 on Thursday, down around 3 percent, while U.S. West Texas Intermediate (WTI) stood at around $46.56, more than 3.3 percent lower. OPEC was not immediately available for comment when contacted by CNBC Thursday morning.
Cutbacks: OPEC and allied non-OPEC oil producers including Russia agreed at the start of December to curb output by 1.2 million bpd. That’s equivalent to more than 1 percent of global demand, in a bid to drain tanks and boost prices. The 15-member organization said it would reduce its output by 800,000 bpd, while Russia and the allied non-OPEC producers will contribute a 400,000 bpd reduction.
However, the cutbacks — which are not scheduled to go into effect until January — have failed to put a halt to tumbling oil prices. The table of voluntary supply cuts shows Saudi Arabia taking 322,000 bpd off the market effective from January 2019 — that’s compared to reference production levels of 10.6 million bpd from October 2018. Meanwhile, non-OPEC heavyweight Russia is seen cutting 230,000 bpd next year. OPEC production cuts were seen at 812,000 bpd, while 383,000 bpd worth of voluntary adjustments from non-OPEC partners bring the combined total of cutbacks to 1.2 million bpd. OPEC is expected to publish the full list of voluntary supply cuts by the end of the week. CNBC
