OPEC / non-members agree on Dec. 7 to adjust crude production by 1.2 mb/d since Jan. 2019
Official reports indicate that the OPEC and non-OPEC Ministerial Meeting decided on December 7 to adjust the overall production by 1.2 mb/d, effective as of January 2019 for an initial period of six months. The contributions from OPEC and the voluntary contributions from non-OPEC participating countries will correspond to 0.8 mb/d (2.5%), and 0.4 mb/d (2.0%), respectively. While Venezuela was excluded from cuts owing to its problems with production, Ecuador has committed to reduce its production 4,000 b/d.
The states participating in the agreement are aiming to stop the fall in crude oil prices, which plummeted 30% since early October. Ecuadorian government officials have declared that the agreement is positive for the country’s economy, which is reliant on international crude oil prices, since these determine the amount of revenue that the Treasury will have to pay expenses in 2019. With a production slightly higher than half a million barrels per day, the country is one of the most modest members of OPEC. However, its daily production is still below the national quota assigned in 2016, therefore the present cut would not generate a greater negative effect, particularly considering the country will have difficulties to reach its production goals for 2018 and 2019. In this context, the Ecuadorian government is seemingly calculating that oil revenues will benefit from a rise in oil prices owing to the agreed adjustment.