OPEC: the output cut is only a short-term guarantee

OPEC: the output cut is only a short-term guarantee

Elisa Maria Giannetto
Share
The commitment of countries to cut oil production is serious in the short term at least. Longer-term plans may move in the opposite direction

The uncertainty surrounding the OPEC deal to cut oil output has led various policy-makers to share their medium- and long-term goals. And while there are no doubts as to the commitments made in the immediate future, in the long run a number of countries are already planning to resume production at levels even higher than before the cuts. Iraq, a country which at the start of the talks was among the most reluctant to go along with the cuts, concerned with safeguarding its economic resources in order to fight insurrection, kicked off the year by setting a good example. The country’s oil minister, Jabbar al Luaibi stated, ''We have already cut output by 180,000 bpd, and we plan to increase that figure to 300,000 by the end of the month''. But the country’s concerning unstable situation could force the government to look to its richest resource to bolster its economic strength. In the meanwhile, last Monday, at the fourth Argus conference, attended by oil sector leaders of the Middle East, Salim Al Aufi, Oman’s undersecretary of oil and gas, promised that his country will cut its output by 45,000 bpd, a commitment agreed on during the Vienna meeting on 10 December of OPEC members and major non-OPEC oil producers. However, the commitment is only binding for six months. Oman produced over 1 million bpd last year and plans to resume that level, at least in the medium term. Further down the road, Al Aufi explained, his country plans to focus on natural gas in order to revitalize industry and diversify its energy output.