With the International Energy Agency predicting 2017 to be the fourth consecutive year of oil supply being greater than demand, OPEC rushes to structure an oil cuts deal for members before time runs out. The objective- bring production down to 33 MMbopd from last year's 36 million.
The decision to cut production was made in a September meeting at Algiers, marking the end of OPEC's policy of no limitations on production. Prices rose in October shortly after the announcement, however, since last week, have fallen again, owing to growing doubt over the deal.
Saudi Arabia has agreed to cut down production, with the demand that any losses incurred as a direct result of the deal will be shared equally by all members. However, OPEC Secretary General Mohammed Barkindo has stated that Libya and Nigeria will be exempted altogether from production cuts while Iran will be given special consideration.
This essentially means that Iraq needs to cut production while Iran should maintain current rates, however, both the nations are so far uncooperative.
With member states mulling over production cuts proposals, Russia- a keen observer in many OPEC meetings- will also be holding consultations with member countries at the Gas Exporting Countries Forum in Doha from the 17th to 18th of November. If consultations yield fruits, this may set precedent for other oil exporting non members to join the talks.
The ramifications if the deal doesn't push through ? In the words of BP CEO Bob Dudley, "If the talks fail, prices will stay at the level they're at".
Source: World Oil