OPEC said to start work on oil supply cut exit strategy

A police officer on patrol ahead of an OPEC meeting in Vienna. (Reuters)
Updated 21 December 2017

OPEC said to start work on oil supply cut exit strategy

LONDON: OPEC has started working on plans for an exit strategy from its deal to cut supplies with non-member producers, two OPEC sources said, a sign that an eventual winding down of the deal is coming onto producers’ radar, at least in theory.
OPEC, Russia and other non-OPEC producers on Nov. 30 extended an oil output-cutting deal until the end of 2018 to finish clearing a glut. But the market is increasingly interested in how producers will exit the deal once the excess is cleared.
Two OPEC sources said the group’s secretariat in Vienna has been tasked to work on a plan with different options and it was too early now to say what the plan would look like.
“It’s a continuity strategy, rather than exit,” one of the OPEC sources said.
Oil prices have rallied this year and are trading near $64 a barrel, close to the highest since 2015, supported by the OPEC-led effort. This is above the $60 floor that sources say OPEC would like to see in 2018.
Publicly, OPEC ministers say it is too early to talk of an exit strategy. But OPEC has said producers want to continue working together beyond the end of 2018, including on supply management.
While oil prices have risen to levels seen as favorable by OPEC, the stated goal of the supply cut is to reduce inventories in developed economies, which built up after a supply glut emerged in 2014, to the level of the five-year average.
OPEC is making progress and said in October OECD inventories stood 137 million barrels above the five-year average. Since the start of deal in January, the overhang relative to that average is down by 200 million barrels, Kuwait’s oil minister said on Wednesday.
A discussion on exiting the deal may be needed before December 2018 if, as OPEC expects, the world oil market returns to balance by late 2018.
OPEC and its allies hold their next full ministerial meeting in June, which will be a opportunity to review progress.
Non-OPEC Russia, which has been the biggest contributor to cuts from outside the group, has been suggesting a review of the deal as early as June. However, its biggest producer Rosneft said this week the cuts could last into 2019.


Britain expects ‘very significant’ week for Brexit talks as clock ticks down

Updated 29 November 2020

Britain expects ‘very significant’ week for Brexit talks as clock ticks down

  • Despite missing several self-imposed deadlines, the negotiations have failed to bridge differences on competition policy and the distribution of fishing rights
  • Britain’s transitional EU exit agreement expires on Dec. 31, and Britain says it will not seek any extension

LONDON: Britain and the European Union are heading into a “very significant” week, British foreign minister Dominic Raab said on Sunday, as talks over a trade deal enter their final days with serious differences yet to be resolved.
EU negotiator Michel Barnier told reporters in London that “works continue, even on Sunday” on his way to a negotiating session, as both sides look for a deal to prevent disruption to almost $1 trillion of trade at the end of December.
“This is a very significant week, the last real major week, subject to any further postponement... we’re down to really two basic issues,” Raab told the BBC.
Despite missing several self-imposed deadlines, the negotiations have failed to bridge differences on competition policy and the distribution of fishing rights.
But Britain’s transitional EU exit agreement — during which the bloc’s rules continue to apply — expires on Dec. 31, and Britain says it will not seek any extension. A deal would have to be ratified by both sides, leaving little time for new delay.
“The bottom line is... in the ordinary course of things we need to get a deal done over the next week or maybe another couple of days beyond that,” Raab told Times Radio in a separate interview.
Earlier, he had signalled some progress on the ‘level playing field’ provisions which look to ensure fair competition between Britain and the EU, and said fishing remained the most difficult issue to solve.
Despite accounting for 0.1% of the British economy, fishing rights have become a totemic issue for both sides. Britain has so far rejected EU proposals and remains adamant that as an independent nation it must have full control of its waters.
“The EU have just got to recognize the point of principle here,” Raab told Times Radio.