Oman is expected to cut oil output by 45,000b/d. This is about 4.5% of its 1mb/d day production, to honor the agreement with the Organization of Petroleum Exporting Countries (OPEC), FX Street reported.
This comes as Oman crude closed trading in 2016 at $54.24 per barrel. The price rally has brought optimistic views about the Omani economy and job market. However, the OPEC deal could be marred by the defiance of producers and hikes in production by independent producers, both of which could render the agreement unworkable, according to Times of Oman.
In 2016, oil made the biggest annual gain since 2009, which was following the global financial crisis that drove prices down on concerns about demand. The price per barrel had fallen to below the $30 level in January 2016, but has since registered a 100% increase, hovering around $55 per barrel at the close of 2016.
Speculations about an agreement between OPEC and non-OPEC members triggered the price rally beginning in early 2016 and, with a deal finally reached on December 11 in Vienna, futures rose at unprecedented levels, with some analysts predicting oil might reach $60 per barrel in 2017. Yet, the price rally could be hindered by loopholes in the agreement. Libya and Nigeria were both exempted from the agreement to trim production due to political instability, and have been increasing output at record levels.