The world’s biggest non-OPEC oi producers are reported to have agreed to cut their oil production by as much as 600K barrels a day. This is confirmed by Bloomberg, with reference to some delegates participating in the OPEC summit in Vienna. OPEC decided to cut its oil production by 1.2 million barrels a day all the way down to 32.5 million barrels a day.
For now, we know that Russia and Kazakhstan also agreed to join the Vienna Accord. It may well be that other non-OPEC oil producers are going to join the agreement as well. At this point, non-OPEC oil producers are ready to cut their oil production by 600K barrels a day in total. Russia is going to be responsible for 300K bpd of the mentioned production cut.
In the meantime, Goldman Sachs experts named the likely oil price ceiling. To be more specific, they predict that even if OPEC nations do really implement the ambitious decision, oil prices are likely to break above the $60/b threshold. However, later on, they are going to come back to the $40-$50/b price range anyway.
The Vienna Accord is expected to take effect in January 2017. Until then, many experts predict volatile oil prices within the range between 50 and 55 dollars per barrel.
At the same time, more and more experts are questioning the agreement reached by OPEC. They say that OPEC may well violate the Vienna Accord in the future. That’s why they call everyone for patience since first we need to see the first figures indicating true production cuts and then compare them to the plan to make conclusions.
Anyway, most of the experts share the same opinion that whether the prices go up to 60 dollars per barrel and higher in early 2017, they are going to drop bac to 50 or even 40 dollars per barrel anyway in late 2017.
