Oil prices could begin to grow in the Q4 2016 against the background of reducing global oil reserves, Senior Research Analyst: Refining, Chemicals & Oil Markets for Wood Mackenzie Alan Gelder told TASS on Wednesday.

“The oil market will re-balance, as oil demand growth continues whilst OPEC supply growth matches non-OPEC decline, so we project oil stocks to fall in Q4 2016 and then again in H2 2017, thus supporting higher prices,” Gelder said.

According to the expert, the recently concluded agreement between Russia and Saudi Arabia on measures to stabilize oil prices will not have a significant impact on the market. “Recent days since the announcement have confirmed our view that this agreement will have little impact on actual oil production for OPEC or Russia, as there were few concrete/specific actions defined by the initial agreement to discuss cooperation,” he said.

Gelder estimated Iran’s chances of joining the decision on limiting production as weak, saying “Our outlook is that the chances are low in the near term, as Iran is close to, but not at, its pre-sanction production level of 4.0 million b/d. We consider Iran will be more amenable to joining a production discussion early next year.”

According to Gelder, if generally effective collaboration between Saudi Arabia and Russia were to develop, it would support higher prices. “If Russia or Saudi Arabia did restrain their oil production, oil prices would rise. That would then support higher investment in non-OPEC producers and response from US producers as rig count rose. This is the key challenge for producers such as Russia, Saudi Arabia and OPEC members and is the issue that led OPEC to compete for greater market share during 2014,” the expert said.

“US tight oil supplies are more flexible than conventional projects due to their smaller scale in terms of volume and investment and so this would be one of the key resource plays that would benefit from any major OPEC output restriction. It is important to note that US tight oil supplies are now in year-on-year decline and this is projected to continue unless oil prices strengthen,” Gelder condluded.