Nigerian Oil Minister and President of the Organization of Petroleum Exporting Countries Emmanuel Ibe Kachikwu told ministers gathered in Vienna oil demand will grow next year by 1.3 million barrels per day, down from the expected full-year demand growth for 2015 of 1.5 million bpd.
Advertisement
LAUNCESTON, Australia China’s renewing of its oil purchase deals with Iran not only provides a boost to the Islamic Republic’s hopes of re-establishing itself in global markets, it also underscores why this week’s OPEC meeting is largely irrelevant. Change in output requires returning to the former set and then the new set will be defined, Asali affirmed.
OPEC had been widely expected to stick with its year-old policy, despite pressure from poorer members of the cartel for a cut in output to prop up the price of oil.
The Iranian official also recounted that Kuwait, the UAE and Saudi Arabia hold that production cut is a temporary means to stabilize the oil price and are against this idea.
The reports that the Saudis would only entertain an output cut if OPEC as well as non-OPEC producers participated underline that OPEC is now an organization in name only.
However remote the chance of a major rethink at Friday’s meeting, the report serves as a timely reminder that Saudi Arabia’s policy of maintaining high output, regardless of the effect on prices, was only ever a short-term measure, said Standard Chartered commodities analyst and long-time OPEC watcher Paul Horsnell.
“Saudi Arabia seems content to wait for lower non-OPEC supply and stronger demand to lift prices next year”, said Julian Jessop, analyst at Capital Economics research group.
“He said Saudi Arabia will keep firm in its strategy of opposing any cut that is not previously coordinated with non-OPEC, obviously meaning Russian Federation”.
And Iran on Thursday said it would not bow to pressure whereby it avoids increasing its production following the lifting of sanctions that had been imposed due to its disputed nuclear programme. If prices recover sharply, it could revive some US shale production, displacing OPEC crude.
”We have said on more than one occasion, we are willing to cooperate with anyone who can balance the market”, said Saudi Arabian oil minister Ali al-Naimi. Prices have dropped 2.3 percent this week.
As there was news that Saudi Arabia lowered its offer prices in the USA supporting the above statement. The move helped to send Brent crude, the global benchmark, down to $42 a barrel from near $100.
One possible scenario is for OPEC to recognize the fact that members are pumping well in excess of the formal ceiling, and raise the group’s collective quota from 30 million bpd to 31.5 million bpd, in line with the current volumes, one source said.
Advertisement
Today’s meeting at OPEC headquarters will meanwhile see it approve Indonesia’s return to the organisation following a six-year absence that had been triggered by southeast Asia’s largest economy becoming a net importer of oil.
