OPEC, Russia oil output freeze deal may be ‘meaningless’: IEA

Updated 23 March 2016

OPEC, Russia oil output freeze deal may be ‘meaningless’: IEA

SINGAPORE: A deal among some OPEC producers and Russia to freeze production is perhaps “meaningless” as Saudi Arabia is the only country with the ability to increase output, a senior executive from the International Energy Agency (IEA) said.
Brent crude futures are up more than 50 percent from a 12-year low near $27 a barrel hit early this year, bouncing back after Russia and OPEC’s Saudi Arabia, Venezuela and Qatar struck an agreement last month to keep output at January levels.
Qatar has invited all 13 members of the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producers to Doha on April 17 for another round of talks to widen the production freeze deal.
“Amongst the group of countries (participating in the meeting) that we’re aware of, only Saudi Arabia has any ability to increase its production,” said Neil Atkinson, head of the IEA’s oil industry and markets division, at an industry event.
“So a freeze on production is perhaps rather meaningless. It’s more some kind of gesture which perhaps is aimed ... to build confidence that there will be stability in oil prices.”
Libya has joined Iran in snubbing the initiative, and the absence of the two OPEC producers — both with ample room to increase output — would limit the impact of any success in broadening the freeze at the April meeting.
The rise in output from Iran in the first quarter post-sanctions has been in line with IEA’s expectation of 300,000 barrels per day (bpd), Atkinson said, adding that Tehran’s output could rise again by the same amount by the third quarter.
“Iran has not exactly been flooding the market with lots more oil. It seems to be far more measured,” Atkinson said.
It will take a while for Iran to regain its pre-sanctions share in Europe, where markets have been taken over by Saudi Arabia, Russia and Iraq, he added.
The IEA, energy watchdog for the Organization for Economic Co-operation and Development (OECD), expects the wide gap between supply and demand to narrow later this year, paving the way for an oil price recovery in 2017.
“We think the worst is over for prices ... Today’s prices may not be sustainable at exactly $40 a barrel, but in this mid-$30s and upward range, we think there will be some support unless there’s a major change in fundamentals,” Atkinson said.

Oil row rumbles on as crisis talks are postponed

Updated 05 April 2020

Oil row rumbles on as crisis talks are postponed

  • The “virtual” meeting is between 11 OPEC members led by Saudi Arabia and 10 other oil producers led by Russia

DUBAI: A crucial meeting of  OPEC+ producers on Monday aimed at cutting output and stabilizing the global oil market has been postponed.

“Monday is too early,” a Saudi oil official told Arab News. “OPEC needed more time to work out facts and figures.”

The “virtual” meeting, which may now take place later this week, is between 11 OPEC members led by Saudi Arabia and 10 other oil producers led by Russia.

It follows an “urgent” call by Saudi Arabia last week, and an intense round of telephone diplomacy between Riyadh, Moscow and Washington.

One key issue is to determine the level at which any proposed oil production cuts would begin. Saudi Arabia has ramped up output to record levels in recent weeks.

After a meeting on Friday between President Vladimir Putin and Russian oil executives, Saudi Arabia was accused of having reneged on the previous OPEC+ agreement, and starting the price war that has destabilized global oil markets.

The accusation prompted a hard-hitting response from the Kingdom, with both Foreign Minister Prince Faisal bin Farhan and Energy Minister Prince Abdul Aziz bin Salman describing the Russian comments as “utterly devoid of truth.”

Behind the spat, there are serious challenges if OPEC+ is to make any progress toward the cuts of up to 15 million barrels per day “expected” by US President Donald Trump.

Despite their differences, both Saudi Arabia and Russia would be unlikely to take on the full burden of cuts without matching reductions by the US. That prospect receded after a meeting between oil industry executives in the White House at which Trump said he would leave the US oil industry to “the free market.”

Free market economics will be on show in the Kingdom on Sunday when Saudi Aramco discloses the price it will charge customers for oil in May. Last month it offered deep discounts to market prices. Demand has fallen substantially since then — down 30 percent according to some oil economists — so further discounts can be expected.