The Abu Dhabi National Oil Company (ADNOC), in line with the recently agreed oil production cut resolution adopted by OPEC, is undertaking the necessary steps to implement cuts, and will inform its customers early next week about any potential change on their crude allocation for January 2017.
In a statement, ADNOC said, “Any reduction in uptake will be planned, and undertaken, in coordination with OPEC, following its ministerial meeting, which was held on November 30, 2016, and stipulated that each member state should adhere to a specified oil output cut.”
Oil producing nations have struck a deal over the weekend to cut output along with the Organisation of the Petroleum Exporting Countries, a pact designed to reduce a global oversupply of crude, lift prices and lend support to economies hurt by a two-year market slump.
The agreement would remove 558,000 barrels a day of crude oil from the market. That would come on top of 1.2 million barrels a day in cuts already agreed to by OPEC, amounting to a total of almost 2 per cent of global oil supply.
The non-OPEC cuts, if carried out as described over the first half of 2017, would represent an unprecedented level of cooperation among oil-producing countries that have been groping for ways to lift oil prices out of a two-year funk.
With the deal finally signed after almost a year of arguing within OPEC, the market’s focus will now switch to compliance.
OPEC has a long history of cheating on output quotas. The fact that Nigeria and Libya were exempt from the deal due to production-denting civil strife will further pressure OPEC leader Saudi Arabia to shoulder the bulk of supply reductions.