OPEC’s Secretary-General, Abdullah al-Badri said on Monday that to tackle the oversupply and prop up oil prices, it was essential for OPEC and non-OPEC members to work together to find a solution, Reuters reported.
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Discussing the potential for a rise in prices, Ms. Fuzaia said there were signs that supplies from USA producers are falling but it is unclear what impact the return of Iranian crude may have on the market.
Asked about comments from a Lukoil official who said Russian Federation needed to work with Opec to reduce supplies, she said: “Opec welcomes any cooperation from countries outside Opec to work with it to stabilise the market and reach suitable prices for all producers…”
Mr al-Badri warned that the current glut is setting the stage for a future supply shock, with prices lurching from one extreme to another in a deranged market that is in the interests of nobody but speculators.
This tendency comes as lower crude oil prices are pressuring investments necessary to sustain robust production in key non-OPEC producers like the United States.
Opec member Qatar echoed that view. China’s annual rail freight volume fell 11.9 per cent in 2015 versus a drop of 3.9 per cent in 2014, adding to worries about contracting economic activity in the second-largest oil consumer.
Energy Minister Mohammed Al Sada, speaking at the same London conference, said prices will recover as they’re now “unsustainable”, not only for unconventional oil fields but for conventional crude production too.
Analysts from Bernstein said global exploration and production spending excluding OPEC would fall by 18 percent this year if oil prices were to average $50 a barrel and collapse by 38 percent if oil was to trade at $30. Iran is pushing to boost exports now that sanctions have been lifted.
A strengthening U.S. currency also helped depress demand for dollar-priced oil, which becomes more expensive for holders of weaker units. The price was also hit by figures showing record oil output from Iraq in December.
Venezuela has insisted on an extraordinary OPEC meeting, but one has to wonder what it might achieve. In a market that is highly volatile and driven by strong emotion, any suggestion there is hope of change would push the price of oil up. But now that demand is considered to be slowing, it makes the outlook for the price of oil to remain subdued.
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Outside of OPEC, if any companies were to encourage a supply cut deal, it would be big oil firms.
