No Guarantees That the Oil Output Freeze Deal Will Help Stabilize the Market

30 november 2016 | IA REGNUM

“Even if today, November 30, OPEC’s decision is to freeze oil output, this can by no means be deemed as a guarantee of subsequent market stabilization. The question is: will all parties be able to honor their commitments,” Alexander Martynyuk, expert with the Analytical Center, said in his interview to the REGNUM news agency.

Aleksander Martynyuk
Aleksander Martynyuk
Department for Strategic Studies in Energy

The expert believes that presently reaching any settlements concerning a single oil production strategy for all of the OPEC countries is again very much up in the air because of the persisting differences between the organization members. The main hitch, when it comes to keeping the preliminary agreements achieved in September, is how individual limits are going to be distributed, the expert explains.

“And even if the decision is to do so, there will still be no guarantee that this will help to stabilize the market, so long as there is no certainty that all of the parties are going to respect their commitments,” Mr. Martynyuk points out.

REGNUM news agency has already informed that today OPEC meets in Vienna to try and reach an agreement on oil output freeze. In the late September, members of the oil cartel reached an agreement to maintain the output ceiling at 32.5−33 million bpd. Many aspects of the deal had not been agreed. And it took the parties some two months of consultations and a special commission working on the issue. Oil production limits shall be set for Nigeria and Libya where oil production was curtailed because of the armed conflicts. Among the key stumbling blocks are the positions of Iran and Iraq.