OPEC to remain inactive towards oil prices
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.
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