What OPEC+ meet­ing to bring oil mar­ket?

Azer News - - Front Page - By Ab­dul Ker­imkhanov

The in­ter­na­tional oil mar­ket is cur­rently over­sup­plied, Chair­man of Vi­enna En­ergy Group, a Vi­enna-based en­ergy Think-Tank, Dr. Ferey­doun Barkeshli said in an in­ter­view with Az­ernews.

The in­ter­na­tional oil mar­ket is cur­rently over­sup­plied, Chair­man of Vi­enna En­ergy Group, a Vi­enna-based en­ergy Think­Tank, Dr. Ferey­doun Barkeshli said in an in­ter­view with Az­ernews.

He was com­ment­ing on the up­com­ing OPEC-Plus meet­ing and shared his views on the ex­pected re­sults of this meet­ing.

Barkeshli noted that De­cem­ber 6 OPEC-Plus min­is­te­rial con­fer­ence in Vi­enna is one of the most com­pli­cated and un­pre­dictable ones.

"The in­ter­na­tional oil mar­ket is cur­rently over­sup­plied. Stocks are back at 2015 level in­di­cat­ing that prices have a down­ward ten­dency. On the other hand, de­mand does not pro­vide in­di­ca­tions of gain­ing strength in 2019 due to com­pli­ca­tions and trade dis­putes be­tween China and the U.S. Hav­ing said that, OPEC-Plus needs to ur­gently cut down pro­duc­tion be­tween 1,000 to 1,500 bar­rels per day in or­der to let stocks dis­ap­pear and pro­vide pow­er­ful in­di­ca­tions to the mar­ket that pro­duc­ers are se­ri­ous to firm up prices. If not, I think oil prices can fall to $ 35-40 bar­rels per day,” the ex­pert said.

Un­der­lin­ing the com­plex­ity of the meet­ing, he said that Saudi Ara­bia has al­ready in­di­cated its will­ing­ness to cut pro­duc­tion, pro­vided that other mem­bers agree to cut back.

"Cur­rently, few pro­duc­ers have ex­cess pro­duc­tion ca­pac­ity and of course, mainly Rus­sia. Rus­sia and Mr.No­vak have not shown any in­di­ca­tions of will­ing­ness to con­trib­ute to a col­lec­tive price cut. Rus­sia wants to see that Saudi Ara­bia plays swing pro­ducer role in­de­pen­dent of Rus­sia. This is a com­pli­cated is­sue and it could even lead to dis­con­tin­u­a­tion of Rus­sian co­op­er­a­tion with OPEC," Barkeshli added.

Speak­ing of those, who may ben­e­fit from the low prices on oil, the ex­pert noted that when crude oil price moves down­wards, pro­duc­ers are the losers.

"That means that a great deal of rev­enue moves from pro­duc­ers to con­sumers. Rus­sia has re­peat­edly in­di­cated that they are happy with $30 price level, but it sounds more like a bluff than real. In the mean­time, the fu­ture of shale oil is at the stake. Breakeven price for shale oil is said to stand be­tween $ 50-60 per bar­rel. As such if the price falls down abruptly, shale oil pro­duc­tion that has put the U.S. back into the main­stream oil pro­duc­tion fold will suf­fer. Shale oil pro­duc­tion is said to suf­fer a de­cline of some 30 per­cent within 2019 that would mean that crude prices can firm up again. The irony is that pres­i­dent Trump has re­peat­edly asked OPEC to bring down oil prices," he added.

OPEC made of­fi­cial the date change to its next min­is­te­rial meet­ing in Vi­enna, which will now take place on De­cem­ber 6 in­stead of the pre­vi­ously an­nounced De­cem­ber 3.

Min­is­ters on an OPEC/nonOPEC mon­i­tor­ing com­mit­tee first men­tioned the date change at the Septem­ber’s sum­mit in Al­giers. The move now puts the reg­u­lar min­is­te­rial meet­ing on its usual Thurs­day, rather than a Mon­day.

OPEC and non-OPEC pro­duc­ers reached an agree­ment in De­cem­ber 2016 to cur­tail oil out­put jointly and ease a global glut af­ter more than two years of low prices. OPEC agreed to slash the out­put by 1.2 mil­lion bar­rels per day from Jan­uary 1.

Non-OPEC oil pro­duc­ers such as Azer­bai­jan, Bahrain, Brunei, Equa­to­rial Guinea, Kaza­khstan, Malaysia, Mex­ico, Oman, Rus­sia, Su­dan, and South Su­dan agreed to re­duce out­put by 558,000 bar­rels per day start­ing from Jan­uary 1, 2017.

OPEC and its part­ners de­cided to ex­tend its pro­duc­tion cuts till the end of 2018 in Vi­enna on Novem­ber 30, as the oil car­tel and its al­lies step up their at­tempt to end a three-year sup­ply glut that has sav­aged crude prices and the global en­ergy in­dus­try.

To­day, oil prices have slightly in­crease on the world mar­kets. On Lon­don ICE (In­terCon­ti­nen­tal Ex­change Fu­tures) cost of the Brent crude oil in­creased $0.51 to trade at $62.20, while the price of Light crude at the NYMEX (New York Mer­can­tile Ex­change) rose $0.44 to stand at $53.39 on world mar­kets.

A bar­rel of Az­eri Light crude oil in­creased by $ 2.10 to reach $ 63.23 per bar­rel on the New York Mer­can­tile Ex­change.

The price of one bar­rel of Azer­bai­jani oil hit the min­i­mum of $ 19.15 per bar­rel in De­cem­ber 2001 and reached the max­i­mum of $ 149.66 per bar­rel in July 2008.

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