EIA: Opec will meet 70 per cent of cut

19/12/2008

Members of the Organisation of the Petroleum Exporting Countries (Opec) will only meet between 50 and 70 per cent of the 4.2 million barrel cut commitment brought into force since September, the Energy Information Administration (EIA) has claimed.

In comments made to Reuters on condition of anonymity, an EIA analyst said that members will be forced to renege on the deal because of the acute cost of implications of restricting supply.

"Once you're looking at a year, compliance drops off greatly. As a group, we think 50 percent compliance for 2009 is a fair estimate," the EIA employee said.

He added that compliance is always greatest during the first quarter after a cut is announced.

Failing to enact cuts may have a subduing effect on oil prices, while heating oil costs could also remain low in 2009.

Opec announced its latest supply cut on Wednesday (December 17th), limiting production by a record 2.2 million barrels a day.