OPEC and Russia, along with other countries participating in the oil production cuts aimed at balancing the market, are looking to create a “super group of oil producing countries,” according to a report from The National.
The move would institutionalize the framework that has been in place since late 2016, when OPEC, plus a group of non-OPEC oil-producing countries led by Russia, cut output by a combined 1.8 million barrels per day (mb/d). The trick has been keeping everyone on board with the limits for an extended period of time, with multiple extensions, while also trying to figure out what to do when the oil market reaches the long-sought after “balance.”
The fear has been that all participants would return to producing flat out, ramping up production in a short period of time, a specter that threatened to crash oil prices all over again. Up until now, OPEC has maintained a shockingly high level of compliance, although that has been aided by the involuntary cuts (i.e. collapse) of output in Venezuela. Still, OPEC and its coalition partners have been cagey about what they plan on doing at the end of this year, offering soothing but vague comments about a “gradual” exit.
But, according to The National, the “super group” led by Saudi Arabia and Russia would offer an institutional framework to manage the oil market post-2018. They hope to create a draft proposal before the end of the year. The goal is “together with the secretary general [of Opec, Mohammad Barkindo], to put together a draft agreement for this group [of 24] to stay together for a longer time,” UAE’s oil minster Suhail Al Mazrouei, who currently holds the OPEC presidency, told The National in Abu Dhabi.