Fujairah: Iraq has raised expectations that the Organisation of Petroleum Exporting Countries (Opec) could reach an agreement on limiting crude oil output when it meets in Algiers next week.
Market conditions have improved since a failed meeting between Opec and non-Opec members to freeze production in Doha in April, Iraq’s Governor to the 14-member group said on Thursday.
Opec, responsible for a third of the world’s oil production, is to meet informally on the sidelines of an energy conference in the Algerian capital on September 28. The group could discuss limiting output.
“This time they have to do something,” Falah Al Amri, who is also the director-general of Iraq’s Oil Marketing Co, known as SOMO, said at an energy conference in Fujairah on Thursday. It’s “the right time.”
Oil prices have lost more than half their value since mid-2014, with benchmark Brent crude falling from a high of $115 a barrel in June of that year. Brent has averaged around $43 a barrel so far in 2016. Al Amri said the current price was “unacceptable” to Opec members.
There has been little confidence of any agreement next week that would have a long-term impact on the market. Opec is also set to meet in Algiers with Russia, who is not a member of the group.
Sceptical
Speaking at the energy conference was also chief executive of Dubai-based Qamar Energy, Robin Mills, who said that he was sceptical of any deal “with teeth” coming out of the meeting.
An audience poll of the energy conference found that the majority of those in attendance, 66 per cent, believed that Opec needs to cut production irrespective of any formal agreement to freeze output.
Last December, Opec dropped its production ceiling of 30 million barrels a day in favour of waiting for the market to settle itself. At the Doha meet, non-Opec members Oman and Russia agreed to the freeze, Al Amri said. Still, a deal wasn’t reached because “the circumstances weren’t ready to strike a deal,” he said.
Algiers “is a little different,” Al Amri said. “Circumstances are better to help them (Opec members) reach a deal.”
Iran, who has insisted on returning production output to pre-sanctions level, was seen as a major obstacle for the Doha deal with the country refusing to sign up to a freeze. However, its output has since edged closer to its target of 4 million barrels a day.
Other Opec members have sought to dampen the chances of any formal deal in Algiers. On Wednesday, the UAE Minister of Energy Suhail Mohammad Faraj Al Mazroui cautioned against the likelihood of an agreement.
“We are not … targeting a decision, we are meeting for consultations,” Reuters quoted the minister as saying on September 21. Opec’s Secretary-General Mohammad Barkindo has also muted expectations.
Russia can ‘in theory’ cut oil output by 5% — deputy minister
MOSCOW: Russia can “in theory” reduce its oil output by 5 per cent, Russian Deputy Energy Minister Kirill Molodtsov said on Thursday, referring to a possible output freeze by major crude producers in a bid to stabilise global oil prices.
The possible regulation of oil production levels had already been agreed with Russian oil companies, he told reporters on the sidelines of an energy conference in Moscow.
But he later told reporters while potential regulation had been discussed with Russian firms this year no formal agreement had been reached. “I said that it had been discussed with companies,” he told reporters.
Molodtsov declined to comment on any possible Russian proposals for the Algeria meeting.
Russia’s oil output was 10.71 million barrels per day (bpd) in August. Its daily oil production touched a record high of 11.75 million barrels on Tuesday.
Daily oil production of 11.1 million barrels is “a fully realistic level” for Russia, Molodtsov said.
— Reuters
