In November 2016, Saudi Arabia led Organization of Petroleum Exporting Countries (OPEC) and Russia led 10 non-OPEC countries forged an alliance to curb on oil supplies to the tune of 1.76 million barrels per day.
If you have missed some of the details, do note,
- 11 member OPEC cartel bore the biggest brunt of the cut to the tune of 1.2 million barrels per day, while 10 non-OPEC countries led by Russia only promised less than 0.6 million barrels per day.
- In addition to that, Russia was given 6 months to reach the compliant level, while OPEC producers began from month one.
- 2nd biggest oil producer in the world, Saudi Arabia shouldered the biggest cut to the 0.486 million barrels per day, while the biggest producer Russia only shouldered 0.3 million barrels per day.
- Moreover, according to latest data, while the OPEC compliance has hit more than 120 percent, non-OPEC compliance hovering in the 80s as of January 2018.
- Saudi Arabia, since the beginning, has cut much more than it has promised to do.
Last year at November OPEC-NOPEC meeting the alliance agreed to extend the production cuts until the end of 2018. However, as Alexander Novak, the Russian energy minister expressed his reluctance to extend the agreement few weeks before the meeting, Saudi energy minister Khalid al-Falih rushed to convince him otherwise.
Though Russia is shouldering a significant portion of the cut (16 percent) its presence is more symbolical than the cut its shouldering. Russia played a key role in 2016 in resolving differences between two arch enemies in the Middle East; Saudi Arabia and Iran in joining cuts together and that is at a time when Iran was planning to extend production post-nuclear agreement that removed sanctions on Iranian barrels.
Now, there are reports, confirmed by Suhail al-Mazrouei, OPEC’s rotating president and energy minister of the United Arab Emirates that negotiations are in place to form a grand alliance of OPEC and non-OPEC members including Russia, who would work as a supply cartel for years to come. Once again Saudi energy minister is working hard to convince Russia to join in.
