OPEC+ must ‘sit down’ to talk compromise solution
SOME hard and tough negotiations have been necessary to bring back some discipline in order to retain the unity and success of OPEC-Plus. It worked really hard to achieve comprehensive unity and maintained over 100 percent commitment through each member adhering fully to their quota.
There is plenty of time to bring about some sort of understanding. The driving season is on in the USA and other parts of the world to keep oil prices stable on the current level of $75 and above until autumn. Therefore, there is no need to be concerned about low oil prices, although some members will be tempted to leak a few barrels in order to take advantage of the prevailing situation. In addition to this is the arrival of the autumn season. Therefore, it is all positive so far, despite the current disagreement.
Additionally, this will give the US shale producers comfort to do nothing, observe the situation, and keep on making real money by taking advantage of OPECPlus’ actions of the last few months. Meanwhile, the US has been generating real cash flow and satisfying the shareholders but not much because most of the producers hedged their volume against fall of oil prices in the future, under the realization of much lower prices. It is paying heavily to hedging companies at the same time. Of course, they had to pay for their gamble in the absence of any future knowledge and perhaps because of shareholder pressure.
Now OPEC-Plus has to look for a solution and some sort of compromise, although the time might not be right. However, the organization did achieve, for the first time, full compliance of all its members without exception.
The role that Saudi Arabia played goes beyond imagination - its persistence, patience and the sacrifices it made. OPEC kept in touch with each of the members to achieve the group’s objective for stability, while creating cash flow for its members during the past months and bridging on the ongoing budget deficits. Such great efforts that were taken should be remembered for years to come.
It is time for open and frank discussions for OPEC, with 22 members agreeing to the ongoing agreement. It is time for reconciliation and it is time to disagree and split away. The oil price is satisfactory... Reap from the hard work of the past few months. Outside members are more suitable to move forward in order to bring stability to the group.