Reduction in the oil output was one way by which OPEC and other oil producing countries could maintain a balance between the demand and price combination for oil in the international market. But this seems to fail miserably to have a change in demand for the product leading to decrease in oil prices. This has been the scenario for a long time now, since the existence and increase of shell gas production by the US. OPEC and other oil producing countries are trying hard to maintain the balance and increase the oil prices in the commodity market but cannot manage efficiently to do so. The last conference meet that happened in Vienna between the OPEC and other 11 non-members meet to decide if they need to continues the prolonged cut in production of oil of 1.8 million barrels that continued since December until first half period of 2017.
There are arguments whether the cut needs to be for 6 months or nine months or 12 months. Some countries expected the extension to be limited to next 6 months but some of the OPEC partners projected to be nine months but some countries like Russia are projecting it to gone beyond 9 months and expected to be continued until 12 months. The oil prices in the commodity market went all-time low till $50 per barrel and there are predictions about it going lower if the balance is not maintained. The low steep in the exports of oil commodity is the primary reason for this complete scenario and hence they are forced to reduce the oil production.
Gary Ross, head of global oil at PIRA Energy, a unit of S&P Global Platts said yesterday that Russia and Saudi Arabia will be the biggest supporter of the oil production cut down because they have some huge events coming on the way in near future. Russia would be having their elections and Saudi Arabia is expected to have Aramco Shares listed on the stock exchange. Although all the OPEC players and not- members of the OPEC community are hoping that this cut down should be sufficient to regain the necessary balance in the oil commodity pricing by the end of this year, but still this cannot be confirmed due to increasing in the production of Shell gas by the US. With the increase in the prices and production of the shell gas things have become difficult for the oil producers, as their efforts to maintain the balance gets slower after this activity.