Senior Energy Expert on Over-Compliance with OPEC Output Cut Deal

VIENNA (Shana) -- The former head of OPEC affairs and relations with energy communities at the Iranian Ministry of Petroleum expounded on the term “over-compliance”.

Javad Yarjani said: “An understanding has been formed in the organization that if any changes are to be enforced in the level of production or reduction to crude supply by the members, it should be decided upon with the full consensus of the members rather than being imposed or demanded by an outside power”.

Speaking to Shana in Vienna, the senior energy expert said based on the OPEC output cut agreement which was enforced at the beginning of 2017, 1.2 million barrels per day of the organization’s daily crude production was cut. However, some member countries, due to certain problems and considerations, decided to over-comply with the agreed output cut levels.

“Regarding the oil price slump in 2016 to below $40/b, these countries sought a rapid price rise and further slashed their output,” he added.

Now that the prices have strengthened in the market to some extent and given that the financial needs of these countries are addressed, discussions in OPEC are about the rising demand for OPEC crude supplies in the second half of 2018, and given the fact that OPEC-non-OPEC supply has dropped beyond the agreed levels, OPEC output should rise to 100 percent conformity to the output cut agreement, Yarjani added.

Agreement on this issue depends on the consensus of all OPEC members on Friday meeting of the organization, he said.

News ID 283363

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