The world’s leading oil cartel OPEC reached a deal with non-OPEC oil producers last week in Vienna to curtail the daily output of crude, meant to help stop oil prices from sliding further downhill that began in October.
The new agreement set the grounds for cutting overall oil production by 800,000 barrels per day by OPEC nations throughout the first six months of 2019. Non-OPEC oil-producing states, such as Russia – one of the world’s largest oil producers – will reduce its output by 400,000 barrels per day (bpd), as part of efforts to drive up the price of crude.
Energy officials in Azerbaijan, another oil-rich county in the Caspian region, announced its support to OPEC’s intervention in the world oil market. Energy Minister Parviz Shahbazov underlined the decision as a necessary step to regulate the market and stabilize prices.
“Recently, due to the political and economic factors, the price of oil has dropped, and the process has got a continuous character,” Shahbazov said on December 7 according to Sputnik. “Production’s exceeding of the consumption in the market and predictions about the decline in the world economy for the next year determined the fall in oil prices.”
“The only support for the oil market would be the OPEC + countries. The decision was a very important step for the oil producers, the oil market and development of the oil industry in general.”
Authorities in Azerbaijan agreed to cut domestic production by 20,000 bpd, despite the country not being part of OPEC. Its overall output stood at 783,000 bpd in October, and when the new agreement kicks off on January 1 that figure will drop to 763,000 bpd.
Crude oil, along with natural gas, is Azerbaijan’s main export. Located north of Iran and south of Russia, it is home to seven billion barrels of proven oil reserves, most of it trapped beneath the Caspian Sea, putting it at number 20 in global rankings for volume of proven crude deposits.
Azeri Light, as Azerbaijan’s oil is called, is extracted via offshore oil rigs in the Caspian Sea from the Chirag, Central Azeri, West Azeri, East Azeri and Deepwater Guneshli fields. The sulfur content of Azeri Light is 0.21 percent, or under 0.5 percent, putting it in a category of crude oil known as “sweet,” and making it some of the easiest to refine. Low-sulfur crude oil is often processed into gasoline and is in high demand, particularly in industrialized countries.
From January to September, Azerbaijan exported close to 22 million tons of crude oil worth around $11.6 million, according to the State Statistics Committee, comprising 81 percent of national exports during the same period.