December 06, 2019 20:33
OPEC countries could cut oil output another 350,000 bpd, non-OPEC - 150,000 bpd - source (Part 3)
VIENNA. Dec 6 (Interfax) - OPEC countries might have to cut oil output another 350,000 barrels per day under the new deal being discussed for OPEC and non-OPEC members to cut output by a further 500,000 bpd overall, a source with knowledge of the situation told Interfax.
Non-OPEC countries would have to cut output back another 150,000 bpd in that case.
If previously Russia was supposed to cut output of oil with condensate by 2% from the October 2018 level, the proposed reduction is now 2.8%, but for oil only, without condensate.
In the current deal, which calls for reducing oil production by 1.2 million bpd relative to the level of October 2018, participating OPEC members' production targets fell 3%, since Iran, Venezuela, and Libya were excluded from the deal and the remaining states took up the slack. Non-OPEC countries decreased their production by 2%.
Under the decision taken on Friday to deepen cuts by 500,000 bpd, that amount will be distributed proportionally among countries.
However, Ecuador is planning to leave OPEC. Its reduction target is 16,000 bpd, though in October it cut production by 76,000 bpd, which may be taken into account in the new quotas.
Under a proportional redistribution of the deepened cut, each country's reduction target would increase by an average of 42%.
In this connection, as well as the exclusion of condensate for Russia, Malaysia, Oman, and Kazakhstan, the change in production relative to October 2018 will change for all countries.
If reduction targets increase by 42%, Saudi Arabia's new target may grow about 135,000 to roughly 450,000 bpd. However, to maintain stability in the market, the country may exceed its obligations. Sources have told Bloomberg that the country will keep production at its current level. In October, it overfulfilled its obligations by about 400,000 bpd.
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