The price of OPEC basket of fourteen crude stood at $43.14 a barrel on Monday, compared with $43.02 the previous Friday, according to OPEC Secretariat calculations on Tuesday.
In May 2017, OPEC and its allies decided to extend the production cut for nine months to first-quarter 2018. Compliance to the first cut was surprisingly high; therefore, a decent level of compliance for the second cut period is expected.
The production cut deals are expected to mitigate the global oil supply glut to a certain degree. As a result, OPEC production in 2017 is expected to drop by 600,000 bbl/d.
However, the recovery of the US shale production, along with production growth from Iran, Libya and Nigeria, will cancel off part of the cut efforts.
In addition, since the cut is not likely to continue through 2018, it is expected that most of the OPEC countries would ramp up production starting from 2018 to compensate the impact of production cut.
Production from non-OPEC countries will start to slowly recover in 2017, mainly driven by strong shale production in the US facilitated by the recovering oil price.
Newly completed oil sands projects in Canada and presalt plays in Brazil will also play roles in the turnaround.
The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).