Cutting oil production by 2 million barrels a day would eliminate the oil glut

22 january 2016 | Lenta.ru

The OPEC is calling an emergency meeting. The reason is obvious: the dramatic fall in oil prices. Members of the cartel will discuss ways to deal with unfavorable conditions in the energy market.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

The problem with this issue is that different OPEC members have different ideas about how much oil shall be produced, experts note. Saudi Arabia, which produces about 10 million barrels a day, has so far been unwilling to compromise. In the meantime, Venezuela, a country at the opposite end of the spectrum, has been hit the hardest by cheap oil. The Bloomberg agency rates Bolivia as the world’s worst performing economy at the moment. The forecast for 2016 predicts a 3.3 decline in GDP.

"If oil production was cut by, say, two million barrels a day, that would be more than enough to eliminate the current glut in the market and the price of oil would increase significantly," Alexander Kurdin, the Head of the Departemtn for Strategic Studies in Energy of the Analytical Center commented on the situation in his interview to Lenta.ru. However, since the OPEC is being torn apart by conflicting interests, there is little hope that any agreement could be reached, the expert believes.