Azernews.Az

By Gulgiz Dadashova

OPEC and non-OPEC producers will meet in Qatar’s Doha on April 17 in a bid to stabilize falling crude prices.

Qatari Energy Minister Mohammed Bin Saleh Al-Sada, who is also the current OPEC president, announced about the meeting on March 16.

"This comes as a follow-up to the meeting that was held last month in Doha between Qatar, Saudi Arabia, Russia and Venezuela at which they proposed an accord to freeze oil output at January 2016 levels and called on other producers to do so," the minister said in a statement.

He further added that to date, around 15 OPEC and non-OPEC producers, accounting for about 73 percent of global oil output, are supporting this initiative.

A plunge in oil prices since mid 2014 is straining the budgets of major oil producers, as Russia and Saudi Arabia which have previously resisted tempering the output were the first to support Venezuela’s initiative to support the prices.

Although Saudi Arabia still enjoys $600 billion in financial reserves, the low price of oil has pushed it to make budget-cutting moves.

In Russia, oil and gas taxes make up about 50 percent of the state budget. Although Russian Economic Development Minister Alexei Ulyukayev claimed that the economy shows a high adaptability to the oil shocks, he warned that the country must be prepared to live with oil prices of $40-$50 for years.

However, whether the oil freeze plan actually goes anywhere, or is just a tool to encourage markets is a topic of discussions, as the initiators of oil freeze deal announced they would proceed only if others commit.

Brent Crude oil prices initially surged above $35.50 a barrel on discussion of a deal. But the details prompted a drop in prices below $33.

Later, the prices recovered again reaching even the mark of $40. But, the prices once again fell on March 16. The cost of the US Light crude oil decreased $0.19 to stand at $36.26, while the Brent crude traded at $39.12.

Russian energy minister Alexander Novak’s statement in Tehran on March 14 put pressure on oil prices, as he noted that Iran could be excluded from a freeze deal to allow it to increase its crude production after Western sanctions over its nuclear program.

Iran pumped out 3.1 million barrels per day (bpd) of crude in February, up from 2.9 million in January, according to OPEC's monthly report released on Monday. It pumped 4.0 million bpd before sanctions were imposed.

Overall production by the 13-nation cartel fell by 175,000 barrels per day in February to an average of 32.28 million bpd, largely because of a steep drop in Iraqi output and smaller falls in Nigeria and the United Arab Emirates, the report said. Supplies from producers outside the Cartel also fell by 40,000 barrels a day in February.

Even a deal represents a step forward, some experts voice that it will be a somewhat symbolic one. They say the market requires serious production cuts, but countries are not willing to cut, which can result in lost of a market share, which might be hard to win back.

The share of OPEC crude oil in total global production decreased slightly to 33.7 percent in February compared with the previous month. OPEC assures that global oil demand, which saw a spectacular growth last year, will grow by 1.25 million barrels a day in 2016.

Although the rare cooperation between major oil producers is seen as economic weakness, with prices falling about 70 percent in the last 18 months everyone seeks to see the global oil glut to ease. So, the next step in the process will be rallying support and ensuring that all are on board for higher prices.

Meanwhile, Azerbaijan’s Energy Ministry reported that the country has not yet received an invitation to join the meeting

"If the invitation is received, we will consider it," the ministry told Trend.

Earlier a senior OPEC delegate said Saudi Arabia, Russia, Venezuela and Qatar hoped to persuade Iran, Iraq, Oman, Kazakhstan, Azerbaijan, Mexico and other producers within and outside OPEC to join them in freezing crude.

Although Azerbaijan's share in global oil production is negligible and does not affect the formation of prices, SOCAR president Rovnag Abdullayev said the country is going to freeze oil production in 2016 at the level of 2015.

In 2015, Azerbaijan produced about 0.8 million barrels of oil a day, while the global output level hit 95.71 million barrels per day.

Last year, Azerbaijan produced 41.6 million tons of oil against forecasted 40.7 million tons, and exported 38.1 million tons of oil to world markets.

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