A deal to keep oil production under control, which has seen prices rise and fuelled economic optimism in Oman, has been extended for another nine months. On Thursday, OPEC members renewed the output cut deal with independent producers in Vienna.

“OPEC member countries and non-OPEC parties Azerbaijan, Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan, after taking into account the decision reached by OPEC at their 172nd meeting, recognised the need to continue co-operation among oil exporting countries to ensure stability in the oil market. In this regard, the aforementioned non-OPEC countries decided to extend their production adjustments, which originally started on January 1, 2017, for a further period of nine months, beginning July 1, 2017,” a statement from OPEC said. 

Under the agreement, Oman, the largest non-OPEC producer in the region, will continue to cut production by nearly 4.5 per cent.

The Sultanate reached one million barrels per day average production for the first time in 2016 but will continue to choke its production at 970,000 bpd, slashing 45,000 bpd, in adherence to the pact.

Some Omani firms have said this pact might be positive for oil prices and for the economy.

“We expect oil prices to rebound due to this agreement, or it should at least stabilise the prices, which can help the companies in Oman plan their future initiatives,” Mohammed Khalid, general manager at Descon Engineering,noted.

An analyst in a leading oil and gas firm in Oman expressed optimism about the deal. “There are a few positives to be derived from this agreement.It is hoped that in a year’s time we will be able to achieve balance in markets and stability in prices following this deal. It is hard to say anything for certain now.”

Oman crude was $50.46 at the Dubai Mercantile Exchange on Thursday, having reached $53.24 on May 24.

“The closest thing to certainty in the oil markets in recent months has been an extension of the OPEC/non-OPEC cuts.

“With that confirmed, attention will now switch to monitoring the two major uncertainties — the rate at which global oil stockpiles drain and the pace of growth in US tight oil production. These two can be expected to keep the market on tenterhooks and the crude prices volatile,” Vandana Hari, CEO and Founder of Vanda Insights, a Singapore-based boutique provider of energy markets research and analysis,maintained.

The first phase of the deal on production cuts was reached late last year to control falling oil prices that inflicted a massive trade deficit on oil dependent economies. Oil gained nearly 20 per cent in the months following the agreement in November and has since hovered around the psychological safe haven of $50, partly due to buoyancy over expectations of renewed cuts. The agreement has witnessed unprecedented compliance levels, especially among OPEC members,which reached 100 per cent in April this year.

Source: Timesofoman