The International Energy Agency (IEA) has said that the deal to reduce oil production to be discussed in the Doha oil summit will have a minimal impact.
The deal brings together OPEC and non-OPEC members and seeks to encourage them to freeze the production of oil at current levels.
The IEA said via its monthly report that if they accept to freeze the production instead of cutting output, then the impact of the deal will be limited.
Oil prices have been rising since mid-2014, as supply continues to increase more than demand.
The IEA points out that Saudi Arabia and Russia are “already producing at near record rates” and that Iran has plans to raise production back to the levels seen before it was hit with sanctions.
Can the oil prices recover?
We should not be hopeful if this is happening anytime soon. The rate at which the production is declining in the US and the OPEC members is small. Hopefully, that may change this year.
As the economies of some countries begin to recover in the next year or two, so does the demand for oil.
Oil has always undergone cycles. There are times when there is a peak and at times it experiences lows. This will indeed come to an end in one or two years, depending on the measures that will be put into place. One thing for sure is that the decline has had the greatest impact on major oil exporters. Continued fall may make their economy fall into recession.