TEHRAN – After the 172nd official meeting of Organization of the Petroleum Exporting Countries, Iran was once again exempted from the OPEC, non-OPEC deal to cut oil production.
The country which was allowed to increase production under the original accord, retains the same output target, Bloomberg reported quoting Kuwait’s Oil Minister Issam Almarzooq as saying.
That deal gave the Islamic Republic room to increase output to a maximum of 3.797 million barrels a day. Nigeria and Libya will also remain exempt from making.
OPEC and its allies extended oil production cuts for nine more months after last year’s landmark agreement failed to eliminate the global oversupply or achieve a sustained price recovery.
The producer group together with Russia and other non-members agreed to prolong their accord through March, but no new non-OPEC countries will be joining the pact and there was no option set out to continue curbs further into 2018. The market was unimpressed as prices tumbled more than 5 percent to under $49 a barrel in New York and more than a billion barrels were traded.
Six months after forming an unprecedented coalition of 24 nations and delivering output reductions that exceeded all expectations, resurgent production from U.S. shale fields has meant oil inventories remain well above the level targeted by OPEC. While stockpiles are shrinking, ministers acknowledged the surplus built up during three years of overproduction won’t clear until at least the end of 2017. The group is prepared for a long game.
Al-Falih said the cuts are working, adding that stockpile reductions will accelerate in the third quarter and inventory levels will come down to the five-year average in the first quarter of next year. While he expects a “healthy return” for U.S. shale, that won’t derail OPEC’s goals and a nine-month extension will “do the trick,” he said.
The Joint Ministerial Monitoring Committee -- composed of six OPEC and non-OPEC nations -- will continue watching the market and can recommend further action if needed, said Almarzooq.
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