Oil supply glut seen in 2017

Disagreements on how to cut oil production among Organisation of Petroleum Exporting Countries (OPEC) member nations will further increase production causing lower prices.

Oil prices fell 3.6 per cent to $47.24 a barrel in London while the West Texas Intermediate in New York posted $46.06 a barrel.

OPEC members has agreed the outline of oil production curbs since the global financial crisis in 2008 but disagree on how to share the cuts that is expected to bring production between 32.5 million and 33 million barrels per day.

The OPEC estimates that it pumped 33.6 million barrels a day last month.

Saudi Arabia is ready to cut production but thinks Middle East rivals such as Iraq and Iran need to cut output.

On one hand, Iraq had sought an exemption from joining any production cuts asking for “special treatment” because of its fight against Islamic State.

On the other hand, Iran will not cut on its production until it has returned to the pre-sanctions level above 4 million barrels a day.

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