OPEC, Russia Shielding Asia from Supply Cuts

OPEC, Russia Shielding Asia from Supply Cuts

The Organization of the Petroleum Exporting Countries (OPEC) and Russia are shielding Asia from supply cuts agreed in a landmark deal in 2016 as they fight to protect their share of the world’s biggest and fastest growing oil market, Reuters reported. In their attempts to do so, the two players have reduced crude deliveries to Europe and the Americas as they implemented a coordinated agreement to cut supply by about 1.8mb/d seeking to reduce a global supply glut and lift oil prices.

OPEC oil supplies to Asia rose by 7% between November 2016  and January 2017, reaching up to 17mb/d and meeting 65% of the region’s oil consumption, The Malay Mail Online informed .

Under a deal agreed November,2016  OPEC pledged to cut production by around 1.2mb/d in H1 of 2017. Other producers, including Russia, pledged to cut another 600,000b/d.

However, data from the US Energy Information Administration (EIA) suggests that global markets remain oversupplied, with around 95.8mb/d of demand being met by 96.4mb/d of supply. Yet, given the cuts and an expected demand increase of up to 1.6mb/d , the global market will likely balance this year.

Dr. Mahinaz El-Baz 318 Posts

Mahinaz El Baz received her PhD degree in International Economics from Helwan University in 2022. She has +10 years of experience in journalism and economic analysis. She received the "Best Economic Article Award" in 2016 from CFA Society Egypt.

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