Azernews.Az

By Nigar Abbasova

The further developments in the black gold market largely depend on the actions of oil producers, as the market needs comprehensive steps from the players to restore a balance.

Venezuelan President Nicolas Maduro earlier embarked on a multi-country tour to various oil-producing nations ahead of OPEC’ Vienna meeting as part of his efforts to stabilize the situation in the market and recover realistic and fair prices.

The oil tour started with non-OPEC Azerbaijan, while the choice is not considered to be a random decision, as the country has long ago gained a reputation of a reliable partner that evokes trust.

Azerbaijan’s President Ilham Aliyev clearly expressed the country's position on the issue, saying that Azerbaijan will not unilaterally increase oil production, even without waiting for other decisions of OPEC member countries.

Venezuelan president visited Azerbaijan as part of an international trip that also included visits to Iran, Saudi Arabia and Qatar.

In the first official visit of the president of Venezuela to Baku Maduro announced that OPEC and non-OPEC countries were "very close" to an agreement on oil production curbs.

Moreover, Maduro put forward a proposal to develop a new formula for stabilization of oil prices for the next 10 years. Maduro’s proposal at first envisages stabilization of the oil market for the next six months and then the development of a new mechanism to determine oil prices and the formula of their stabilization for a decade.

While drop in oil prices seriously affected all oil-producing countries, including OPEC states (the cartel pumps about 40 percent of the world’s crude) Venezuela stood among those most affected due to huge dependence of the country on the commodity.

The further action of non-OPEC states is essential for the market, as drop of supply by 0.5 million barrels is expected to be reached by means of output reductions in the countries outside the group.

Following the meeting in Azerbaijan, the Venezuelan leader visited Tehran and received support from his Iranian counterpart Hassan Rouhani, who said that Iran backs any effort that will bring stability, fair price and a fair distribution of shares to the oil market.

After lifting U.S.-led sanctions and implementation of the landmark deal earlier this year, the Middle Eastern nation spared no efforts to regain its lost market shares by boosting oil production.

OPEC members earlier agreed to cut down the cartel’s output to 32.5-33 million barrels per day, while Iran was exempted from an informal agreement and was allowed to pump at the level "that makes sense".

Iran's deputy oil minister Amir Hossein Zamaninia earlier said that Tehran was ready to encourage other OPEC members to join a plan to cut output and bring stability to the oil market, mentioning that oil at $55-$60 a barrel is a fair price to bring a balance of supply and demand to the market.

Following his visit to Tehran, Maduro arrived in Riyadh for bilateral talks and met with Saudi King Salman bin Abdulaziz, Crown Prince Mohammed bin Naif bin Abdulaziz, as well as Oil Minister Khalid al-Falih. The position of Saudi Arabia is of pivotal importance, as any production cut agreement without the world’s largest oil producer is doomed to failure.

Maduro reiterated that the anticipated agreement between OPEC and non-OPEC states is "very close". Maduro’s visit coincided with a visit of the Russian Energy Minister Alexander Novak who also held joint meetings with Falih.

Russia, the position of which is important for the stability of the oil market reportedly found common ground with Saudi Arabia on a possible agreement with OPEC and plans to stabilize the black gold market.

President Maduro concluded his tour in Qatar where he held meetings with the top leaders of the country regarding oil price stabilization. The details of the meeting have not yet been disclosed.

OPEC President, Qatari Energy and Industry Minister Mohammed Saleh Al Sada earlier stressed the need to strengthen interaction between the oil producing states.

Further details of the preliminary deal are due to be unveiled at the cartel’s meeting in November.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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