Can Oman Capitalize On Opec+ Production Deal?

Oil export revenues are up 23% y-o-y, and the Opec+ agreement will cause further gains. But how much can Muscat ramp up output from its ‘difficult’ fields?

Having kept crude and condensate output at an unusually consistent 970,000 b/d since the Opec+ ‘declaration of cooperation’ deal took effect in January 2017, last week’s decision to reduce over-compliance means Oman has freedom to increase output ( MEES, 22 June ).

The Joint Ministerial Monitoring Committee (JMMC) will “coordinate amongst the countries with spare capacity” says Saudi Energy Minister Khalid al-Falih, adding that “it just so happens that the JMMC has the membership of Saudi Arabia, the UAE, Kuwait, Oman, Algeria and Venezuela, and with the exception of Venezuela all of the other countries hold most of the spare capacity today” ( MEES, 29 June ).

Oman can certainly use all the additional output it can get. The Sultanate ran a near $12bn deficit in 2017, adding to its ballooning $35bn debt. The 44% debt-to-GDP ratio isn’t particularly worrying in itself, but Oman’s economy lacks the fundamentals to outgrow it. The IMF projects a rising debt-to-GDP ratio at least until 2023, and rating agencies have repeatedly downgraded Oman’s economic outlook ( MEES, 23 March ).


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