Azernews.Az

OPEC member countries will hold a meeting in Vienna on June 5 to talk over the oil market situation and decide on the need of changes in production quotas.

It is expected however that the decision of the cartel will not be in favor of prices, which, though getting some gain last month, still remain far from their peak level in 2008.

Analysts of British economic research and consulting company Capital Economics believe that Gulf Cooperation Council, led by Saudi Arabia, will once again shrug off calls from other members of the cartel, such as Venezuela, to cut oil production in order to shore up oil prices.

In a report, obtained by Trend analysts said that it is highly unlikely that Saudi oil minister, Ali al-Naimi will want to change tack at the same time that the Kingdom’s current oil strategy appears to be bearing fruit.

Analysts believe that Saudi Arabia’s strong balance sheet allows it to take a longer-term view of the oil market, and the country seems willing to tolerate low oil prices now in the hope that they are higher in the long-run.

The current OPEC production quota is set at 30 million barrels of oil per day. Oil prices at the world market are in the range of $65 per barrel for North Sea Brent and $59 per barrel - for the American variety WTI.

Such prices are unacceptable for many major oil producers, especially for Venezuela, which is strongly affected by oil crisis. Last week the country’s president Nicolas Maduro said that Venezuela is pushing for a new agreement between OPEC and non-OPEC nations to stabilize oil prices.

"We're currently working on a deal that hopefully can materialize in June regarding an announcement between OPEC and some of the most important producers in the world to finish stabilizing the market in the second half of the year," he said.

Earlier it was reported that a technical meeting between OPEC officials and representatives from Russia, Brazil, Mexico and Azerbaijan in Vienna ended without a pledge to cut output.

One of the factors that could prevent oil prices from further rise is the possible boost of Iranian production. The country has recently stated that OPEC is unlikely to take a decision to cut the production at upcoming meeting. At the same time, the possible removal of the sanctions against the Islamic Republic would allow it to increase its production and export levels. Thus, the inaction of OPEC along with oversupplied market could lead to the further oil prices decline.

According to the International Energy Agency (IEA), OPEC oil supply rose by 160,000 barrels per day (bpd) to 31.21 million bpd in April - the highest since September 2012, and nearly 1.4 million bpd above a year earlier - as Iraq and Iran boosted output and top exporter Saudi Arabia held flows above 10 million bpd, according to the IEA’s report.

---

Follow us on Twitter @AzerNewsAz