Abu Dhabi: Organisation of the Petroleum Exporting Countries (Opec) and non-Opec members will continue to hold discussions to reach an agreement on cutting production to rebalance the oil market in the coming days, Opec’s secretary general Mohammad Barkindo said in Abu Dhabi on Monday, despite persistent doubts whether anything positive will come out of the meetings.
“Consultations among between Opec and non-Opec will continue in the coming days and weeks with another high level committee set for later this month. It is vital that Opec and non-Opec members to come together to balance the market,” said Mohammad Barkindo while delivering a speech at the Abu Dhabi International Petroleum Exhibition and Conference.
“The discussions with non-Opec countries led by Russia were positive last month in understanding viewpoints of various parties.”
He also told reporters that Opec is committed to Algiers accord that was put together in September and Russia will be on board in the deal.
“We as Opec remain committed to the Algiers accord that we... put together. All Opec 14 we remain committed to the implementation,” Barkindo said in remarks to reporters at the conference, according to Reuters.
“We have no price objectives... inshallah [God willing] with the implementation of the Algiers accord and cooperation of the non-Opec member countries, the rebalancing process will be brought forward in 2017.” The oil prices jumped by more than one per cent on Monday due to optimism that there might be a deal. Brent, the global benchmark was trading above $46 per barrel at around 6 pm UAE time.
Opec agreed on September 28 in Algeria to reduce output to a range of 32.5 million to 33 million barrels a day and decide how much each member should cut by its next meeting on November 30 in Vienna.
The agreement helped push oil prices to a fifteenth month high of about $50 a barrel in October although they have subsequently fallen amid doubts whether a deal is possible as some member countries like Iraq, Iran, Nigeria and Libya seek exemptions and differences between Saudi Arabia and Iran continue to resurface.
“Given economic pressures at home for each of the main producers, and a week global economic forecast, although members genuinely want to agree on who must cut what, I don’t expect there will be consensus on any hard production caps,” said Adrian Nizzola, a partner in Dubai based consultancy Simmons & Simmons.
“What is more likely to be agreed in Vienna is Opec’s long term strategy and at best there may be agreement on soft targets,” Nizzola said. He also added that Saudi could play the responsible parent, and absorb a majority of the cut itself, to force an agreement, but that may be too much to ask.
The consultations are being undertaken as oil prices slide due to over production and weak demand. From more than $110 per barrel in 2014, oil prices dropped to less than $50 per barrel in recent times.
This is the second time in less than a year that Opec and non-Opec countries would be meeting to chalk out a deal to cut or freeze production. In Doha earlier this year, oil producing countries failed to reach an agreement in freezing output as Saudi Arabia insisted that Iran join the deal. Iran, which is fresh from sanctions is trying to increase production to four million barrels per day as it tries to capture the market share which it lost to other countries during the sanctions period.
Iraq too is ramping up its production so as to generate more revenue to fight Islamist elements, the country’s oil minister Jabbar Al Luaibi recently said.
