PEC and its allies have all but decided to cut oil production in 2019 to shore up what they see as a weak market ahead. Now comes the hard part: negotiating how much to cut, how to allocate quotas, and what production level to set as the baseline for the cuts. Getting all 25 members of the OPEC/non-OPEC coalition — with their competing agendas, domestic considerations and geopolitical rivalries — will not be an easy task. The group next meets December 6-7 in Vienna, and discussions have already begun on those particulars, delegates say, with talk that between 1 million and 1.4 million b/d may need to be slashed.
OPEC is a different organization than it was in late 2016, the last time it agreed to institute output cuts. Some members have boosted production, others have shrunk. The Republic of Congo has been added as a member, while Indonesia has left. A new set of quotas will need to be hashed out to be reflective of current realities.
The current exemptions for Libya and Nigeria may be a place to start. Saudi energy minister Khalid al-Falih has suggested that they may be asked to join in the cuts this time. Libya and Nigeria, both suffering from internal disruptions, were not given quotas when the coalition instituted 1.8 million b/d in cuts starting January 2017, while Iran was given a cap slightly above its production level at the time. Production from Libya has risen 580,000 b/d from the October 2016 baseline on which the cuts were based, and Nigerian output has risen 120,000 b/d, according to OPEC data.