Abu Dhabi: Venezuela, which has been badly hit by low oil prices will be pushing hard for some kind of a deal to cut or freeze production when oil producing countries meet in Algeria next month.
The country’s oil minister Eulogio Del Pino is currently on tour of oil producing countries seeking global cut in production to boost prices.
He met Oman Oil Minister Mohammad Bin Al Rumhy last week and went to Iran to shore up support for an agreement at the meet.
“Venezuela is one of the most vocal members of Opec in wanting to have a cut in oil production. The country is heavily reliant on oil income and they want oil prices to move up to support their economy,” said Edward Bell, commodity analyst at Emirates NBD.
He said the country might not be getting much support from other oil producers except countries like Algeria.
“Even Nigeria would be reluctant to support Venezuela on this as the country’s output has down from 2 million barrels a day in January to 1.5 million barrels a day in July due to security situation in Niger Delta.”
Venezuela expects oil price of $70 per barrel as ideal to help the global financial situation, the country’s president Nicolas Maduro said last week as he tries hard to shore up support to boost oil prices, which have plunged by more than 60 per cent since 2014.
“We are nowhere close to $70. Oil price rallied strongly over the course of August on the back of comments from Saudi oil minister. I don’t think this is going to continue for long,” Bell said.
Meanwhile, oil experts are sceptical of a deal at the meet despite oil markets reacting positively to the development with prices going up in the last few weeks.
“I doubt it. It will all depend on whether Saudi Arabia can leverage some alignment with the other major producers, Russia, Iran and Iraq. Politically I don’t see Saudi Arabia and Iran reaching agreement anytime soon and Iran or Nigeria agreeing to curtail production given their need for foreign currency,” said Adrian Nizzola, partner at Simmons & Simmons consultancy.
“On the plus side, worldwide crude storage is very tight, so operationally there may be some latitude to slow down production.”
Brent, the global benchmark was trading at less than $50 per barrel on Monday afternoon, down by more than 3 per cent as global glut weighs on oil markets.
An informal meeting of Opec member countries is scheduled to take place on the sidelines of the International Energy Forum in Algeria from September 26 to 28.