Moin A Siddiqi analyses the world oil market situation in the light of the recent deal between OPEC and non-OPEC states.

On 1 January, the Middle Eastern dominated Organisation of Petroleum Exporting Countries (OPEC), which controls over two-thirds of world oil exports, ratified an unprecedented deal in Cairo with five non-OPEC rivals, to remove nearly two million barrels a day (b/d) from the 76 million b/d world markets.
Under the agreement, OPEC has reduced supply by 1.5 million b/d for six months and five-independent exporters (Russia, Mexico, Norway, Oman and Angola) have pledged cuts of 462,500 b/d, just short of the 500,000 b/d demanded by OPEC.
Russia pledged to trim exports by 150,000 b/d; Norway 150,000 b/d; Mexico 100,000 b/d, Oman 40,000 b/d and Angola 22,500 b/d. Total output of the five last year was 15.64 million b/d and of which Russia accounted for 7.12 million b/d, Mexico 3.5 million b/d and Norway 3.3 million b/d.

The cartel’s new ceiling is the lowest for a decade
OPEC’s micro-management strategy has now resulted in four rounds of production cutbacks, in order to balance world supply with a waning energy demand. The cartel’s new ceiling (21.7 million b/d), excluding sanction-bound Iraq, is the lowest level for a decade. OPEC’s lynchpin, Saudi Arabia, has reduced its output by 1.65 million b/d since January 2001. And, production cuts among other OPEC heavyweights include Iran 864,000 b/d, Venezuela 573,000 b/d, the United Arab Emirates 466,000 b/d, Kuwait 459,000 b/d and Nigeria 313,000 b/d. On paper, the OPEC-10 total output has fallen by around 5.1 million b/d, or 19 per cent over the past year.

Read the full story in the February 2002 edition of The Middle East Magazine

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