LONDON/DUBAI: OPEC is determined to keep pumping oil vigorously despite the resulting financial strain even on the policy's chief architect, Saudi Arabia, alarming weaker members who fear prices may slump further towards $20. Any policy U-turn would be possible only if large producers outside the exporters' group, notably Russia, were to join coordinated output cuts. While Moscow may consult OPEC oil ministers before their six-monthly meeting next week, the chances of it helping to halt the price slide remain slim.
Submitted by Dalan McEndree via OilPrice.com, OPEC next gathers December 4 in Vienna, just over a year since Saudi Oil Minister Ali Al-Naimi announced at the previous OPEC winter meeting the Saudi decision to let the oil market determine oil prices rather than to continue Saudi Arabia’s role of guarantor of $100+/bbl oil.
Saudi Oil Minister al-Naimi says it is "difficult, if not impossible" for OPEC or Saudi to give up market share by cutting crude production, and data confirmed Saudi crude oil exports rose to 6.897mln bpd in October, up from 6.722mln bpd in September. This was then followed by the UAE Oil Minister confirming OPEC will not change output levels and has no intention of holding an emergency OPEC meeting.
With the last day of OPEC pre-negotiations almost over, the latest from Vienna is that Iran and Iraq appear to have softened their positions ahead of a crucial OPEC meeting on Wednesday, however as the WSJ reports, "it may not be enough to satisfy Saudi Arabia’s demands for a broad-based oil-production cut."
It was January 2016 and oil prices had crashed to their lowest in more than a decade. Saudi Arabia's health minister, Khalid al-Falih, a favourite to take over the oil ministry from his mentor Ali al-Naimi, was not panicking. Falih told an audience of oil executives, bankers and policymakers at the World Economic Forum in Davos that the world's top oil exporter might benefit from oil below $30 per barrel. It could help to speed up reform and restructure the economy, and move Saudi Arabia to a smaller and more effective government and unleash its private sector, he said.
OPEC oil production was little changed in April near the highest level since November 2012 as Saudi Arabia pumped 10 million barrels a day.
Production by the Organization of Petroleum Exporting Countries slipped 1,000 barrels to 31.295 million a day this month, according to a Bloomberg survey of oil companies, producers and analysts. Last month’s total was revised 267,000 barrels higher to 31.296 million a day, mostly because of a change to the Saudi estimate.
Who could have seen this coming? With oil prices holding at 4-year lows, heavily pressuring around half of US shale production economics, the "secret" US deal (see here and here) with Saudi Arabia to crush Russia via oil over-supply in a slumping demand world appears to be backfiring rapidly for John Kerry and his strategery team.