There are concerns that Libya and Nigeria will be boosting output in the near-term and that other OPEC members could violate terms of the output reduction effort. Non-OPEC producers appear diligent regarding output cuts.
“The 11 non-OPEC signatories to the deal have pledged to cut 558,000 bpd of their combined production between January and June, joining OPEC’s plans to shave off 1.2 million bpd of the cartel’s total production in the first half of 2017. Out of the 558,000-bpd non-OPEC cut, Russia has pledged to curtail output by 300,000 bpd, but would do so gradually over the first six months of the year. So far, Russia has said that it reduced output by 117,000 bpd in January,” reports OilPrice.com.
OPEC and Russia have in all cut at least 1.1 million barrels per day in production so far. However, Societe Generale oil analyst Michael Wittner said U.S. shale output was rebounding faster than expected as more rigs drilled better and more efficient wells more quickly.
“According to Bloomberg estimates — based on IEA and OPEC figures — non-OPEC compliance in January was 48 percent, with output reduced by 270,000 bpd. Among the 11 non-OPEC nations, only Oman – a Saudi Gulf Arab ally and a member of the Gulf Cooperation Council (GCC) – brought its production within the level it had promised,” according to OilPrice.
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