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6

OPEC bulletin 11/17

D e c l a r a t i o n o f C o o p e r a t i o n

immediately, with a return of investor confidence. By

late December 2016, the OPEC Reference Basket had

improved by nearly 20 per cent over the previousmonthly

average to reach $51.67/barrel, the first time the Basket

had ended above $50/b in 18 months.

The ‘Declaration of Cooperation’ represented a con-

certed effort to accelerate the stabilization of the global

oil market through voluntary adjustments in total pro-

duction of around 1.8 million barrels/day. At a second

joint OPEC/non-OPEC Producing Countries’ Ministerial

Meeting, held on May 25, 2017, parties decided to

extend the voluntary production adjustments for another

nine months commencing on July 1, 2017. This recon-

firmed the commitment of the participating countries to

achieve their noble goal.

This lengthy and rewarding process has led to the

return of broad-based optimism on oil market prospects

and a general comeback in investor confidence. More

than this, a framework for cooperation has been put

in place that will provide the oil industry with the tools

needed to quickly respond to future imbalances.

Dire conditions requiring action

The repercussions of the downturn which started in mid-

2014 were being felt throughout the entire international

oil and gas sector by producers, consumers and inves-

tors alike by the beginning of 2016. It was marked by a

dramatic price decline, with the OPEC Basket falling by

an unprecedented 80 per cent between June 2014 and

January 2016. This was the largest percentage fall in the

six episodes of sharp price declines observed over the

past four decades.

Supply outpaced demand, which in turn led to a

sharp build in global inventories in this time frame. Over

the course of 2016, OECD commercial oil stock levels

fell somewhat but remained more than 300m b over the

five-year average. There was a dramatic rise in non-OECD

inventories, along with expansion in some non-OECD

strategic petroleum reserves. The industry struggled

under weighty pressure.

The reverberations of this price shock also strongly

affected the world economy. Many thousands of oil work-

ers found themselves unemployed, producing countries

saw their oil revenues cut in half or worse, and invest-

ment ceased, threatening future supply. In both 2015 and

2016, a dramatic contraction in oil industry investments

led to combined spending for oil and gas exploration and

production falling by more than $300 billion over the two

years — 26 and 22 per cent per year, respectively. 

In 2016, the gravity of the cycle became apparent

to both producers and consumers alike. As it has done

many times in the past, OPEC intensified its long-standing

dialogue with other global actors in the energy industry

and the oil market in particular. It built new pathways of

communication to reach out to even more oil producing

and industry participants.

Throughout the year, OPEC undertook numerous

September 28

September

October

November December

2016

October 28

October 29

November 21–22

November 30

December 10

November 28

170

th

(Extraordinary)

Meeting of the OPEC

Conference

171

st

Meeting

of the OPEC

Conference

1

st

Meeting of

the High-level

Committee of the

Algiers Accord

1

st

Meeting of

the High-level

Committee of the

Algiers Accord

and non-OPEC Oil

Producing Countries

1

st

OPEC and non-

OPEC Ministerial

Meeting

2

nd

Meeting of

the High-level

Committee of the

Algiers Accord

Extraordinary

Meeting of the High-

level Committee of

the Algiers Accord