Finally, the oil organiation is to announce shortly that its mission to balance the high oil inventory in the tanks to its five-year average will be reached soon. The present balance is an excess of 35 million barrels which OPEC, with the participation of Russia, can bring to order with its current supply of 1.8 million barrels.
This is happening exactly 15 months afte rits famous agreement reached with members and non-OPEC members including Russia to cut productionn by 1.8 million barrels from January 2017. The world is surprised by the commitment of OPEC and Russia, and the level of compliance that averaged at 100 percent.
Oil price are moving in the right direction towards a level of $70 per barrel and above, partially due to the current political situation in Syria and various threats of war on the horizon. fFinancial speculators have been taking full advantage of these situations to cash on, benefiting from higher oil price.
It seems the failure of OPEC members in meeting their production targets such as Venezuela, Libya and Angola paved the way for further oil reduction. This helped OPEC maintain a strong and firm stand and gain oil market’s confidence. Reducing production and adhering to daily reduction of 1.8 million barrels for more than 15 months is an achievement that OPEC is being rewarded for today.
The challenge is to see how far OPEC can go this year and beyond in sustaining its cuts and stabilizing oil prices. What fair price is the organization aiming for without harming the current growth and demand on oil?
Certainly, any level below $75 per barrel should be fair and enough, as shale oil producers will be delighted with any level above $65. The same enemy that OPEC fought hard in 2014 to get rid of or eliminate is appearing strong and is growing faster than OPEC. $70 is very handsome number that certainly can satisfy their shareholders globally.
OPEC is finally steady on the right track. It managed to organize itself, and managed non-OPEC particularly the biggesgt producer Russia and will maintain the same for years while ina agreement, provided all keep a close eye on the stable growth of oil prices.
Yes! Mission has been accomplished!
By Kamel Al-Harami – Independent Oil Analyst