Oil Surplus for OPEC

The UAE (United Arab Emirates) has stated that there is nearly 158 barrels of surplus crude oil that remains on the market. Such a surplus may lead to an extension of a deal made last year, in which UAE members struck an agreement to cut the total amount of barrels produced per day to 1.8 million. The reason for the cut in the output of crude oil is that the massive production beforehand had caused destabilization in the market, which was sought to be solved by the new capped limit at 1.8 million per day. To give an idea of the fluctuations in the market, oil is now $64 a barrel, when last year it was $40. The massive changes cause’s investors to lose confidence in the market, leading to them pulling investments or neglecting to make them any longer with the new loss of confidence. This is a major issue for any country involved in OPEC and countries dependent upon OPEC for their own oil consumption (which is pretty much the entire world) as oil is OPEC’s lifeblood, and a country dependent upon OPEC will face an uncertain future in oil pricing.

A UAE spokesman claims that all members of UAE are fairly unanimous in extending the deal. The actual length of the extension is still under debate and has yet to be announced. OPEC members will be holding a meeting in Vienna at the end of the month and will be urging other countries to adhere to the quota system that has been established. Urging countries such as Libya, Iran, and Nigeria to join the system of capping the amount of oil that they produce. OPEC leader, Mohammed Barkindo, also urging nations worldwide to discuss the reservation and future of energy to secure a global plan and understanding of the industry.  

Source: “UAE sees oil producers extending cuts to rebalance market.” ArabianBusiness.com, www.arabianbusiness.com/industries/energy/383436-uae-sees-oil-producers-extending-cuts-to-rebalance-market.