Then, Venezuela, one of the worst economies in the world, started tough negotiations to convince OPEC and some non-OPEC members like Russia to freeze the production at January level. It`s attempts, supported by Russia were field in Doha meeting on April 17 as well.
After all, with keeping production level at 32.5 million barrels per day (mb/d), OPEC succeeded to make non-OPEC producers, especially the US, to decline output. For 2016, it is expected the non-OPEC output decrease by 0.7 mb/d and the glut on markets would be clear by late 2017.
Once, in 2008, the global markets faced glut and prices declined significantly, OPEC`s production level was about 32.5 mb/d, but they decreased the volume by 2.5 mb/d to support the prices. Since then, non-OPEC output increased by about 6 mb/d, while the Cartel`s production level is currently stood at around 32.3, including 730,000 b/d is Indonesian production, which returned to OEPC recently.
During last two years, also the upstream investment declined by 40 percent, while the figure had doubled during 2000-2013 to $500 billion per year.
It means that the global oil production wouldn`t increase significantly in coming years and returning glut to markets in near future is not expected.
Then, Iran and the Persian Gulf states can develop their upstream sector confidently, because the oil extraction costs in these countries are about $10-$14/barrel, very less than Russia, the US, Canada, etc.
For instance, Iran has a plan to absorb $85 billion investment in upstream oil sector by 2021. Now, it can go ahead with more confidence.
The oil ministers of OPEC members are preparing to hold the annual meeting, no more worried about the future of oil markets seriously.
OPEC`s true approach to glut
02 June 2016
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Once, OPEC members failed to reach an agreement to decline ceiling output several months after starting oil prices in mid-2013, the oil futures faced rapidly plunge and the prices fell to bellow $30/barrel in early 2016.
