Why OPEC's new supply deal will add little crude oil to markets

Why OPEC's new supply deal will add little crude oil to markets

Why OPEC's new supply deal will add little crude oil to markets

But since the group had gone well overboard and trimmed output by nearly 2 million barrels a day, due in large part to a steep falloff in Venezuelan oil production, respecting the original target will translate into more oil for the global market - on paper, at least.

The "Declaration of Co-operation" agreement between Opec and allied non-Opec countries effective from January 1, 2017, has been very successful in balancing the market by reducing the overhang of a staggering 340mn barrels above the OECD (Organisation for Economic Co-operation and Development) five-year average commercial stock levels of 2.81bn barrels, he said.

On Saturday, non-OPEC oil producers agreed to participate in the pact but a communique issued after their talks with the Vienna-based group provided no concrete numbers amid deep disagreements between OPEC arch-rivals Saudi Arabia and Iran.

Al Jazeera's Paul Brennan explains why.

Saturday's accord, in which non-OPEC countries ratified the previous day's deal, dropped the pledge that the 1 million barrel-a-day increase should be shared proportionally among members, opening the way for the full volume to flow, Al-Falih said.

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The additional production is expected to keep oil prices lower than they would have been this year.

"The only country that can increase production is Saudi Arabia, so its interpretation of the deal is the one that matters", said Ann-Louise Hittle, a veteran OPEC watcher at consultant Wood Mackenzie Ltd.

Two years ago, OPEC and Russian Federation set about raising the price of oil by cutting output.

Saudi energy minister Khalid Al-Falih.

"I agreed to have 100 percent of compliance, not more", Iran's Zanganeh said as he left OPEC headquarters on Friday.

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World oil prices, which had already risen earlier on Friday, continued to rise after the Opec decision ws confirmed, commodities traders reported.

Ministers also acknowledged that production problems in several countries meant the real number of extra barrels coming to the market would be several hundred thousand less. Nevertheless, we know only too well that as long as the ayatollahs are running an ideological political system in Tehran, there will be no similar progress in matters of regional compliance. These historically high stockpiles drive home the potential risk of sustained high oil exports from the world's largest economy, even with the shale oil industry facing a lower growth rate while still accounting for around 80 percent of total global output growth in 2018.

Up to April 2018, while oil prices increased by almost 25% compared to the same period previous year, investment in oil industry has not picked up in a commensurate manner.

The most recent price rally followed an OPEC decision to restrict supply in an effort to drain global inventories. He's blamed the cartel for recent increases in oil prices, which he argued have been artificial and fueled simply by countries' desires to get more money. The U.S. motorbike maker has in the past warned of a "significant impact" on its sales if the European Union decides to increase duties on motorcycles in retaliation. That has since then helped push up the price of oil by nearly 50 per cent.

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