Friday’s OPEC meeting in Vienna has ended with news that participants are pleased with progress on oil levels. But, no new details on future production cuts to maintain prices at a long-term, satisfactory level were agreed.
OPEC is the group of oil producing and exporting countries that together, produces around half the oil used around the world. Since imposing a fuel production cut nine months ago, it was noted at the meeting that the glut of oil has been markedly reduced.
However, there’s still an imbalance which has the price of Brent crude oil at the $56.43 dollars per barrel mark. That’s a 25% rise from June, but still a little below the $60 per barrel price, OPEC producers are reportedly targeting.
While the meeting included positive discussions on how the current production reduction is going, unease remains as the future of oil production levels and price remains uncertain.
While oil use is set to increase across some parts of Asia, the production of shale energy in the US is still a key disruptive element to OPEC’s ability to manage production and price stability of the valuable commodity.
The current agreement on lower production levels ends in March 2018 and there are fears that stock levels could rise again quickly, if OPEC members all raise their production rates back to pre-agreement levels.
Before the meeting, Russian energy minister Alexander Novak told reporters that the co-ordinated efforts to maintain production cuts was essential. He added that a strategy for the future was also required.
No details on output plans for the future have been announced since the meeting ended. However, another positive note was that Nigerian oil production is expected to increase to the 1.8 million barrels per day level - the current cap other producers are adhering to.
Nigerian Minister of State for Petroleum Emmanuel Ibe Kachikwu told Bloomberg television that once oil production hits 1.8 million barrels a day, they will place a cap on production themselves, so they’re in line with other OPEC members.
He also added that if more cuts are needed from March next year, then it’s likely they will be imposed.