Opec's production deal faces multiple challenges

A NEW year and a new challenge for Opec. The oil group must prove that it can still call the shots as it starts to manage supplies after flooding markets for a good two years.

Supplies are expected to tighten as Opec, with outside support, takes out about 1.8 million barrels per day from production over six months, with the cartel making two-thirds of the reduction. Demand is also expected to improve by at least 1.2 million bpd.

Brent prices, which have doubled from their nadir a year ago, have jumped by a fifth since the November deal in Vienna to limit output, and have brought a US$60 price within view.