The limits of limiting production

The significance of a production freeze will only be felt if other major producers follow suit which the parties to this agreement have said as much publicly. Convincing other OPEC members—in particular Iran and Iraq—to limit production growth will be a monumental challenge. Iran has already had some success in regaining markets it had lost when sanctions were imposed in 2012 and is unlikely to heed calls to restrict output so soon after sanctions were removed. Iraq may be unable to meaningfully raise production in 2016 but this relates more to security concerns. In parts of the country unaffected by security issues, major new projects will continue to add to global volumes as the country rebuilds its oil industry. Libya too is producing at a fraction of its pre-civil war levels and will likely seek to maximize production if the political situation stabilizes. Adherence to this agreement even among the four countries will also be under scrutiny: past instances of OPEC-Russia production arrangements have unwound messily only a short while after being agreed.

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