Referring to OPEC`s just-released WORLD Oil Outlook 2016, Sada continued to look to the future: some speculators were already optimistic before the deal. Pierre Andurand of Andurand Capital, a hedge fund, says the OPEC deal could push oil above 60 $US a barrel in a matter of weeks. He notes that speculators have mainly bet on the failure of OPEC and that large oil consumers may have to protect themselves quickly against rising prices. Airlines could, for example, guard against rising fuel costs. “We achieved great success today,” said Mohammed Bin Saleh Al-Sada, Qatar`s energy minister and chairman of the OPEC conference. “This agreement is out of a sense of responsibility” for all oil-producing nations, he said, as well as the “well-being and health” of the global economy. “This agreement comes from the sense of responsibility of Opec member countries and non-Opec countries for the general well-being and health of the global economy,” he said. But disagreements between Saudi Arabia – the world`s largest oil producer – and Iran have raised doubts about whether a deal will be reached. Analysts stressed that the agreement depended on the agreement of non-OPEC members.
Of that amount, Russia will cut 300,000 bpd, Novak said. He added that it would be gradual and produce by the end of March Russia 200,000 bpd less than its October 2016 level of 11.247 million bpd – Russia`s highest production estimate to date. Spencer Welch, director of IHS Energy, said the deal would give a boost to oil prices in the short term, but added: “Opec members continue to have differences over how production should be measured, which will make the deal difficult to control.” The deals in recent weeks are a turnaround for the Saudis and their allies, such as Kuwait and the United Arab Emirates, who have pursued for two years a policy of increasing oil production aimed at driving down prices in order to extort more expensive producers in the United States and elsewhere. The experiment had mixed results, as production in the United States turned out to be more resilient than some analysts had expected, while the resulting low prices exhausted the finances of countries like Saudi Arabia and Russia, which depend on oil revenues. The cuts will occur on January 1st in effect and last for six months. Meanwhile, traders will monitor oil traffic to determine if fewer people are leaving the port. They can`t watch Russia`s promise to cut production by 300,000 b/d because much of its production is transported by pipeline, says Abhishek Deshpande of Natixis, a bank. He believes, however, that the deal will begin reducing global oil inventories next year. Non-OPEC production has fallen this year, giving further impetus to the cartel`s efforts. The deal reached Saturday at OPEC headquarters in Vienna was the latest attempt by Saudi-led producers to adjust production to influence crude markets. Oil-producing nations outside the Organization of the Petroleum Exporting Countries agreed on cuts of 558,000 barrels per day, according to a statement after the meeting. He added that while non-OPEC oil producers increased their supply by 1.5 million barrels per day in 2015, the consortium now expects oil supply to non-members to decline by 800,000 barrels per day in 2016 – and grow even less in 2017, at a rate of 200,000 barrels per day.
“This agreement consolidates and prepares us for long-term cooperation,” Saudi Energy Minister Khalid al-Falih reporters said after the meeting, calling the deal “historic.”