The Organization of the Petroleum Exporting Countries (OPEC) and Russia have agreed to pump more crude to help reduce prices and prevent a supply shortage. The production cut objective of 1.2 mb/d that was agreed in November 2016 has been by far exceeded (by 152% as of May 2018 and even more since then) and the OPEC will now target a 100% compliance instead starting from July 2018 until the end of 2018. Thus, this landmark decision would equate to an effective increase of global crude oil production of up to 1 mb/d.
However, the OPEC failed to spell out how the additional production would be allocated among its members. This will be a key issue in the coming months since several members currently have no capacity to pump more crude.
In November 2016, Russia and the OPEC jointly decided to cut their output by 1.8 mb/d in order to prop up global prices and production levels were set for each member country: Saudi Arabia agreed to limit its crude production by nearly 486 kb/d to 10.058 mb/d, while Iraq, the second largest producer among OPEC, agreed to cut its production by 209 kb/d. 24 countries representing around 60% of the global oil production committed themselves to achieving this target and the production cuts were extended again in December 2017.
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