“We will not come out of the meeting empty-handed”, Algerian energy minister Noureddine Bouterfa said in Algiers on Sunday.
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Algeria and several OPEC members express hopes that an informal meeting of the cartel here could pave the way for OPEC and non-OPEC members to freeze oil outputs, but oil prices won’t recover immediately according to an expert.
Opec could see a new push to clinch a first deal to curb output since 2008 next week when the group meets informally in Algeria next week.
“I think this time it is more hopeful that they will come closer to freeze the production because Saudi Arabia’s output is already in record high and Iran is also closer to their pre-sanction level”, Xiaoyi Mu, Senior Lecturer in Energy Economics at the Center for Energy, Petroleum and Mineral Law and Policy, told Sputnik.
A previous agreement in April among major OPEC and non-OPEC producers at a summit in Doha to freeze output at January levels fell apart over Saudi Arabia’s insistence that Iran be a party to the deal.
The smallest member of OPEC has struggled under low oil prices.
In a statement issued late Thursday, Minister Jabar al-Luaibi set a production ceiling of between 4.75 and 5 million barrels per day. Countries have boosted output and reached their targets, and current oil prices are not good for producers, Al-Amri said on September 22 at an energy event in Fujairah in the United Arab Emirates.
Saudi Arabia and Russian Federation have indicated that they will take measures to help stabilise the market, but the recent data proves that both countries have been ramping up production.
The prices have since slightly recovered, reaching a peak of over $50 per barrel in early June. For the week, it rose 0.3 per cent, accounting for gains in the past two sessions. But sources say the officials found little common ground. So it has gone from talk of some sort of deal on a production freeze, to just talk (or “consultations’)”. Non-OPEC Russia is producing is at its post-Soviet high.
If any agreement is reached to cut production, it will certainly be welcomed by the market as it has been eight years since OPEC last took action to the downside; and that was at a meeting in Algeria.
And a long feature in the Financial Times this week revealed the country’s biggest oil group is busy boosting drilling and production (by a rumoured 500,000 barrels a day) from its mature oil fields in Western Siberia, which is not the stuff of a production freeze.
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Brent crude oil and US West Texas Intermediate futures, trading classifications that are important benchmarks for oil prices, turned positive immediately after the news, with the European benchmark jumping more than one per cent. Two sources said Saudi Arabia’s Gulf OPEC allies the United Arab Emirates, Qatar and Kuwait were expected to contribute to any output reduction.
