OPEC’s output cap agreement has halved oversupply in the oil market, driving the average price up 23.2 percent from $43.8/barrel in 2016 to $54.0/barrel in 2017.
This has supported economies of African countries like Angola as well as Nigeria and Libya, which have both ramp-up production while benefiting from an exemption clause.
This has also supported currency market liquidity and revenue buffers required to balance budgets in key oil exporting countries like S/Arabia and Russia.
Accordingly, OPEC is set to hold its 173rd extraordinary meeting on Thursday,30th November 2017. Our view is that the cartel alongside Russia will lengthen the output accord to the end of 2018 with the possibility for a review by mid-year if the market dynamics change.
Accordingly, OPEC is set to hold its 173rd extraordinary meeting on Thursday,30th November 2017. Our view is that the cartel alongside Russia will lengthen the output accord to the end of 2018 with the possibility for a review by mid-year if the market dynamics change.
Nigeria and Libya’s exemption clause may be revisited as capping both members’ output at 1.8 mbpd and 1.0 mbpd respectively is a likely scenario.
The Nigeria’s National Statistics Bureau recently reported that domestic oil output averaged 2.0 mbpd in Q3-2017. Hence, the argument to cap Nigeria’s output level may intensify.
Although a preliminary meeting held by top members of OPEC and Russia suggests that most members will be voting for an extension, a shorter than expected extension or a delayed outcome of the meeting may trigger pull-back in oil prices to a sub-$60/barrel level.
Although a preliminary meeting held by top members of OPEC and Russia suggests that most members will be voting for an extension, a shorter than expected extension or a delayed outcome of the meeting may trigger pull-back in oil prices to a sub-$60/barrel level.
(C) United Capital Plc
0 comments:
Post a Comment