opec-flag

OPEC Holds with Russia and the Deal Rolls On

The 173rd Meeting of the OPEC Conference and the 3rd OPEC and non-OPEC Ministerial Meeting
Vienna, Austria, 30th November, 2017

Like every OPEC Meeting, there was much conjecture beforehand but I felt there that there was only one option,
to hold where they were and roll on, supposedly, for at least another nine months. Ministers seemed keen not to fuel gossip and upset the markets before any official agreement had been made particularly as traders had already built the anticipated cut in to pricing.

The choice was clear – hold on and maintain prices at this level, falter and watch them crash, cut further, push them higher and open the Shale floodgates. Not actually that simple but an easy and quick explanation. However, in the short term that is the right easy solution and OPEC has often thought short term. Yet, following on from the original decision to bring in the cuts, the strategy has worked well particularly as only a couple of years ago OPEC was again being written off as having lost control of the market. But there was a plan that many couldn’t see. The issue now is that re-balancing in one sector requires something similar in another. With the price of oil holding around the $60 level, 14% up on where it was at the last meeting and 40% higher than it was two years ago, even higher prices could work against OPEC.

Read More

OPEC Keeps the Deal Alive and Shale’s Dreams Too

The 172nd Meeting of the OPEC Conference and 2nd OPEC and non-OPEC Ministerial Meeting Vienna, Austria, 25th May, 2017

This Meeting was extremely important for OPEC and the Austrian authorities too, who were naturally very mindful of the atrocious terrorist attack in Manchester this week and others elsewhere beforehand.

Security had been stepped up to the highest level in years. It has always been in place for OPEC Meetings, but this time there was a greater awareness of the threat, with Ministers from twenty-four countries and market followers from around the world attending a series of meeting over the last few days.

During the opening address, HE Khalid A. Al-Falih, the Saudi Arabian Minister and Conference President announced that the market had moved towards balancing since the last Meeting in November, but that there was more work to do in terms of reducing inventories. International Oil Companies were publishing improved results and investment was returning to the upstream sector. He was optimistic about the future, expecting higher global GDP with healthy oil demand growth particularly from Asia, where most of OPEC’s business now lies. He was also very positive about the agreement between OPEC and non-OPEC producers.

The post OPEC Keeps the Deal Alive and Shale’s Dreams Too appeared first on The Energy Compass.

Read More

opec-flag

OPEC Keeps the Deal Alive and Shale’s Dreams Too

The 172nd Meeting of the OPEC Conference and 2nd OPEC and non-OPEC Ministerial Meeting Vienna, Austria, 25th May, 2017

This Meeting was extremely important for OPEC and the Austrian authorities too, who were naturally very mindful of the atrocious terrorist attack in Manchester this week and others elsewhere beforehand.

Security had been stepped up to the highest level in years. It has always been in place for OPEC Meetings, but this time there was a greater awareness of the threat, with Ministers from twenty-four countries and market followers from around the world attending a series of meeting over the last few days. (more…)

Read More

opec-flag

OPEC and Non-OPEC Producers Sign the Deal

Following on from my last report – After six months of intense discussions and meetings, OPEC and its non-OPEC counterparts have finally agreed a deal to cut oil output by around 1.8mbpd.  What they seem to have forgotten is that since OPEC decided to follow the strategy to keep pumping back in December 2014, its members have increased their own output by 3.8mbpd.  Nevertheless, the fall in US shale production has offset some of that by around 600,000 bpd but, even so, there is still another 3mbpd extra in the market from OPEC alone and we therefore have to ask how far will the cut of 1.8mbpd go towards bringing forward the supposed balancing of the market which would have taken place anyway next year.

The sense of urgency from Saudi demonstrates the dire situation the Kingdom is in, and the expressions of Khalid Al-Falih, the Saudi Oil Minister, and Mohammad Barkindo, the Secretary General, reflect the tireless effort that the two of them have put in.  They have been instrumental in securing the deal but hardly look overjoyed.

Conversely, Dr. Mohammed Bin Saleh Al-Sada, the OPEC Conference President and Alexander Novak the Russian Energy Minister, in the picture below, seem particularly excited.  They are in the limelight and no doubt delighted with the achievement as all producers must be across the world.

(more…)

Read More

opec-flag

OPEC Gets the Deal – Market to Cut by 1.8mbpd

In reality, it could have gone either way. So easy for market followers to dismiss any incentive that OPEC may try to implement but the true resolve was there and members fell into place and with that, Russia came too.
The success overtook the mistrust between leading members and non-OPEC producers with the realisation that the cartel and its competitors may never again have such an opportunity to unite for a common course and share out the spoils of the market. How long it will last for is another matter and only time will give the answer.

Each member country has accepted an output ceiling with Saudi taking the largest cut followed by Iraq and Iran. Libya and Nigeria have been exempted and Indonesia which had just rejoined OPEC has once again left the cartel. The total cut for OPEC will be 1.2mbpd based primarily on October figures but not effective until January and this will be the first cut since 2008 but the next surprise came with the announcement that Russia would actually cut by 300,000 leaving other non-OPEC producers to be responsible for the remaining 300,000. Supposedly OPEC members have signed up to the deal but it seems to be contingent on Russia and other non-OPEC producers formally signing too, to make the deal effective.

Read More

opec-flag

OPEC – On the Move?

On Monday 8 August, Dr. Mohammad bin Saleh Al-Sada, the Minister of Energy and Industry for Qatar and also the current OPEC President,  announced that “Higher oil demand is expected in the 3rd. and 4th. Quarters”. This supposedly signified good news for OPEC and other producers of oil particularly as he then went on to say that the recent decline in oil prices was only temporary. He added that OPEC members, like all other  producers, would be attending the International Energy Forum in Algeria from 26 to 28 September and that during this time there would be an opportunity to meet and, I assume, discuss matters of mutual interest.

However, it will not be an official meeting and although this statement was issued by the OPEC Secretariat, so far, there is no reference to any form of OPEC Meeting on the OPEC web site. The statement simply declares that the strategy of not cutting output is working well and that there is no cause for concern, yet the fact that he goes on to say that they will meet, as they are bound to do anyway, sends a message to the watching world that OPEC “could” make a move.

(more…)

Read More