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By Trend

OPEC faces a huge challenge to agree on a cut, with individual country-by-country maximum levels which do not exceed the 32.5-33.0 million barrels per day, director of Downstream Consulting at IHS Markit, Spencer Welch told Trend on November 22.

Commenting on the recent agreement reached between Venezuela and China to increase the joint oil production, the expert said that this is one of a number of bits of news which makes an OPEC cut less likely.

“Other bits of news include record exports of oil from Saudi Arabia in September, record OPEC production levels in October, record Russian production levels in October, increasing production from Nigeria, increasing production from Libya,” said Welch.

Earlier, Venezuela and the China National Petroleum Corporation (CNPC) agreed on an investment plan of $2.2 billion, which will increase joint oil production by 277,000 barrels a day.

Venezuelan President Nicolas Maduro said after signing of the agreement that with this new deal "we will reach 800,000 barrels a day with China."

According to Venezuela's Oil and Mining Affairs Minister Eulogio del Pino, the funds will be used to finish the construction of a new oil factory in China and to increase oil production at three joint ventures in Venezuela.

Regarding the remarks made by Maduro that OPEC countries are ready to reach a "forceful" agreement on cutting oil output, Welch said it is unlikely that any country would agree to measure which they do not believe is in their own interests.

“With Nigeria and Libya likely be to given a “get-out” clause from any cut, although Saudi Arabia has clearly said that they will not shoulder the burden of a cut alone (as they have in the past), it is very likely that Saudi Arabia and its two close allies, the United Arab Emirates (UAE) and Kuwait, will have to supply the bulk of reductions to have any chance of decisively turning markets around,” he said.

In September, OPEC producers agreed during the informal meeting in Algiers to cut down the oil output to 32.5 million barrels per day (bpd) from current production of 33.24 million bpd.

How much each country will produce is to be decided at the next formal meeting of OPEC in November.

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