Oil producer cartel OPEC and its partners will need to keep production lower than their agreed target through 2019 for benchmark Brent crude to come back to $70 a barrel (bbl), oil and gas consultancy Rystad Energy said.
Last week, the OPEC and its Russia-led allies agreed to slash oil production by a bigger-than-expected 1.2 million barrels per day (MMbbl/d).
The producer group needs to stay 700,000 bbl/d below its agreed target of 31.8 MMbbl/d through 2019 in order to bring a recovery in benchmark Brent crude prices to the $70 per bbl level, Rystad analyst Bjornar Tonhaugen said in a note.
"The agreed production cuts will not be enough to ensure sustained and immediate recovery in oil prices," Tonhaugen said.
Crude prices have see-sawed of late on worries of a global economic slowdown on one hand, and a boost from production cuts on the other.
Brent crude futures, currently trading at just over $61 a bbl, have lost nearly a third of their value since reaching a four-year high of $86.74 in early October.
Recommended Reading
Repsol Plans to Double Oil Production in Venezuela
2024-05-01 - Spain’s Repsol plans to double its oil production in Venezuela and continue with its diluent swap agreements with the OPEC country as approved by the U.S. government.
US Refiners to Face Tighter Heavy Spreads this Summer TPH
2024-04-22 - Tudor, Pickering, Holt and Co. (TPH) expects fairly tight heavy crude discounts in the U.S. this summer and beyond owing to lower imports of Canadian, Mexican and Venezuelan crudes.
US Gulf Coast Heavy Crude Oil Prices Firm as Supplies Tighten
2024-04-10 - Pushing up heavy crude prices are falling oil exports from Mexico, the potential for resumption of sanctions on Venezuelan crude, the imminent startup of a Canadian pipeline and continued output cuts by OPEC+.
What's Affecting Oil Prices This Week? (May 6, 2024)
2024-05-06 - Stratas Advisors forecast that oil demand for 2024 will increase by 1.41 MMbbl/d in comparison to 2023 and that oil demand will increase by 810,000 bbl/d in comparison to 2Q23.
Global Oil Demand to Grow by 1.9 MMbbl/d in 2024, Says Wood Mac
2024-02-29 - Oil prices have found support this year from rising geopolitical tensions including attacks by the Iran-aligned Houthi group on Red Sea shipping.