Oil Output Freeze Deal Incapable of Supporting Long-Term Price Growth

Russian Economic Development Minister Maxim Oreshkin said that, for the moment, the agreement of the Organization of the Petroleum Exporting Countries (OPEC) and some key non-OPEC oil producers to cap output helped to drain excess oil supply and stabilize the market.

MOSCOW (Sputnik) — The agreement of the Organization of the Petroleum Exporting Countries (OPEC) and some key non-OPEC oil producers to cap output will not lead to higher long-term oil prices, which are influenced by oil producers that did not sign the deal, Russian Economic Development Minister Maxim Oreshkin said Friday.

"These decisions obviously do not lead to long-term growth of oil prices, those are determined by other factors, one needs to look at the development of oil production in such countries as the United States and Libya," Oreshkin said.

The minister added that, for the moment, the agreement helped to drain excess oil supply and stabilize the market.

In November 2016, OPEC agreed to cut oil production by 1.2 million barrels per day to 32.5 million barrels per day for the whole cartel starting 2017. On December 10, OPEC finished a meeting with non-OPEC countries in Vienna, at which non-OPEC countries decided to cut oil output by 558,000 barrels per day, with Russia cutting the output by 300,000 barrels per day from January 2017.