Experts: 4 factors may put an end to OPEC+ deal

Baku. 9 January. REPORT.AZ/ Member States and non-member countries of OPEC may face a number of challenges in 2018. 

Report informs citing the Vestifinance.ru, further aggravation of the situation in the global oil market, uncertainties that may arise in demand and supply are possible.

The Bloomberg agency analyst Grant Smith believes 4 factors can create a change in the global oil market and put an end to OPEC+ agreement.

The first of these factors is reduction of production due to geopolitical reasons in Venezuela and Iran. According to Helima Croft of RBC Capital Markets, the US President Donald Trump can revise the nuclear industry sanctions by re-examining the nuclear deal with this country after demonstrations in Iran. In Venezuela, it is possible to reduce production due to the economic crisis, and eventually the OPEC+ contract can be abolished.

The second reason is the risk that OPEC+ members will not comply with quotas. The biggest possibility here is the increase in production in Iraq by exceeding the quota.

The third reason is the premature conclusion of the OPEC+ agreement, due to the balance of the oil market and high oil prices. Notably, in June, OPEC members will meet at the next summit to discuss the situation in the oil market. According to the Goldman Sachs' forecasts, at the end of the second quarter of 2018, the global oil market will be balanced. 

The fourth reason is the acceleration of shale oil production in the US on background of rising oil prices. OPEC+ members have no doubts that production in the United States will increase. But if this process happens faster than expected, then members of the agreement can end OPEC+ agreement to maintain their market share.