Riyadh – Mubasher: Saudi Arabia is likely to improve its fiscal position as oil prices have rose above 15%, while the production cut is lower at 4.6%, according to Al Rajhi Capital.
"We feel that the downside risk to oil price remains low as of now giving more comfort for major producing nations even in the absence of further significant upside from the cut," the report said.
The research firm noted that the OPEC deal enhances the government’s ability to pursue National Transformation Programme (NTP) 2020, providing more room for fiscal measures and reducing short-term impacts on economy.
On 30 November, OPEC agreed to cut its own production by 1.2 million barrels daily as of next January.
All participating countries except Iran, agreed for an equitable cut of around 4.6% from their reference production levels, the report mentioned.
The agreement also includes that non-OPEC countries will cut production by 0.6 million barrels per day.
Russia’s oil minister announced that his country will do a gradual cut up to 0.3 million barrel per day in the first half of 2017.
Al Rajhi Capital added that by applying these production quotas for 2017, oil production will reduce by 1.8 million barrels per day, while demand is forecast to increase 1.1 million barrels per day, as per OPEC’s latest report.
