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Meeting to Discuss Oil Cut Compliance
Meeting to Discuss Oil Cut Compliance

Meeting to Discuss Oil Cut Compliance

Meeting to Discuss Oil Cut Compliance

Representatives of some OPEC and non-OPEC nations will meet in Abu Dhabi, the UAE, on Aug. 7-8 to discuss why some of them are falling behind in their pledges to cut production, an OPEC statement said.
The meeting, co-chaired by Kuwait and Russia, will examine reasons why some countries are not fully implementing their cuts, it said. Some nations will argue that independent sources used by OPEC to assess compliance overestimate their production, according to two people familiar with the matter, who asked not to be identified because the discussions are not public, Bloomberg reported.
Targets for output reduction are based on production estimates from six independent parties, known as “secondary sources”. Last year, as the deal was being negotiated, Iraq complained about these estimates, claiming they are not accurate. Other members of the Organization of Petroleum Exporting Countries are also blaming secondary sources for their poor performance, said two people.
The agreement, which came into effect at the start of the year, brings together OPEC and non-OPEC nations to take as much as 1.8 million barrels of oil a day off the market. While compliance was high in the first months of the pact, it began to slide as the expected crude-price recovery failed to materialize.
Some non-OPEC nations have been invited to the Abu Dhabi meeting but have yet to confirm their presence, one of the people said. OPEC members Algeria and Venezuela—who sit on the committee that oversees compliance—will not attend, two people said. Algeria’s implementation so far this year was at 70%, while Venezuela’s averaged 39%, according to the International Energy Agency.
Saudi Arabia, OPEC’s biggest producer and its de-facto leader, said this week it planned to step up pressure on nations that are not complying with their commitments. The following day, the UAE, another country that has not fully implemented its own cuts, pledged further reductions from September.
Iraq, the second-biggest producer in OPEC, will also attend the meeting, the people said. It had previously argued that it should have been excluded from cuts because of its battle with terrorists. OPEC nations Libya and Nigeria have been exempted as they try to restore production curbed by internal conflict, and Iran, freed from international sanctions, has also been permitted to increase output.

 

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