LONDON: An oil price rally fuelled by Opec’s deal to cut crude output ran out of steam Thursday with analysts doubting the cartel’s ability to seriously tackle a supply glut.

Following a meeting that included Russia, the Organisation of the Petroleum Exporting Coun-tries stunned markets Wednesday by saying it planned to trim total production by some 750,000 barrels per day.

This followed talks in Algiers as world oil producers seek ways to prop up prices that have plunged from $100 in 2014 to near 13-year lows below $30 at the start of 2016, mainly owing to excess supplies.

“We are confident that Opec countries will not stick to the agreement,” commented Commerzbank analyst Carsten Fritsch.

But even if they do, exemptions from cuts granted to Iran, Nigeria and Libya mean that “the problem of surplus will not be solved if these countries take full advantage of their capacities again”, Fritsch said.

Exact details of the deal remain to be agreed and analysts said markets will now wait to see whether non-Opec producers such as Russia, the United States and Canada will make cuts of their own.

In a reaction Thursday, Russian Energy Minister Alexander Novak said that his country intends to keep oil production at current levels.

Wednesday’s deal came after Opec kingpin Saudi Arabia allowed bitter rival Iran to be exempted from the cutbacks, as the Islamic republic recovers from years of sanctions on its oil exports.

Published in Dawn, September 30th, 2016