OPEC and Non-OPEC oil producers are expected to meet in Moscow, Russia on 10th December to finalize a pact on cutting down global crude oil production. The meeting was earlier fixed in Doha, Qatar on 9th December. Recently, the OPEC countries jointly decided to reduce the total crude oil production down to 32.5 million bpd starting from January 2017 and will make efforts to collaborate with non-OPEC producers for their cooperation to cut production by 600,000 barrels per day (BPD).
Russia had earlier said that it would agree to halt at current production volume, however, now assured a cut down production of almost 300,000 bpd. The authorities in Russia estimate an 11.21 million bpd hit in the month of November and is expected to use this figure in the OPEC meeting. In addition, the Russian oil companies have agreed with the 300,000 bpd cut down and willing to abide by it.
If Russia maintains a similar stand, the rest of the other non-OPEC producers will be left with the cut down option of 300,000-bpd requested by OPEC, which they will have to divide amongst themselves. The other non-OPEC nations, including Kazakhstan, Azerbaijan, Bahrain, Mexico and Oman are expected to extend their support and are ready to cut down their production volumes.
Mexico has welcomed the OPEC deal and is willing to keep its 2017 production volume down to 1.944 million bpd. The county’s one of the major oil companies Pemex’s is planning to reduce overall production in the coming year. The cut down is anticipated to stabilize Mexico’s crude oil market and also slow down the fast exhausting oil reservoirs, which started declining in the early 2000s.
Few week prior to the OPEC meeting, Oman came out with the willingness to cut down about 5 to 10 percent of its crude oil production if the cartel agreed to the pact. The crude oil production in Oman is estimated to average over 1 million barrels per day in 2016, which has been recorded for the first time ever.
Summary: Global crude oil production to be cut down effecting January 2017.