Related
Officials from Venezuela, Saudi Arabia, Mexico and Russia said yesterday only that they would monitor prices. Crude futures sank to a four-year low in New York. OPEC meets tomorrow, with analysts split evenly over whether the group will lower output in response to the crash in prices.
Crude fell into a bear market this year amid the highest U.S. production in 31 years and speculation that Saudi Arabia and other members of the Organization of
Petroleum Exporting Countries won’t do enough to curb a surplus. Prices are below what nine of group’s 12 members need to balance their national budgets, data compiled by Bloomberg show.
“All these countries are significantly affected by lower prices and want to see cuts, but it is a big step between having these talks and taking actual coordinated action to achieve this,” Richard Mallinson, geopolitical analyst at London-based Energy Aspects Ltd., said by phone yesterday. “The key is going to be what happens amongst OPEC members.”
Brent, the global benchmark, rose 10 cents to $78.43 a barrel on the London-based ICE Futures Europe exchange at 3:19 p.m. Singapore time. West Texas Intermediate added 3 cents to $74.12. Yesterday the contract closed at the lowest in more than four years.
Workers use machinery to move drill sections on the drilling floor of the oil derrick... Read More
Joint Commitment
The discussions didn’t result in any joint commitment to reduce supplies, Rafael Ramirez, Venezuela’s Foreign Minister and representative to OPEC, told reporters after the meeting. All parties said they were worried about the oil price, he said.“There is an overproduction of oil,” Igor Sechin, chief executive officer of OAO Rosneft, Russia’s largest oil company, said after the meeting. “Supply is exceeding demand, but not critically” and Russia wouldn’t need to cut production immediately even if oil fell below $60 a barrel, he said.
Russia, Saudi Arabia, Mexico and Venezuela between them produced 27.8 million barrels a day of oil last year, according to data from BP Plc. Total global output was 86.8 million barrels daily, the oil company’s figures show. OPEC pumped 30.97 million barrels a day last month, according to data compiled by Bloomberg.
Venezuelan Diplomacy
The meeting yesterday in Vienna comes after weeks of diplomacy from Venezuela, holder of the world’s largest oil reserves, which was attempting to coordinate actions with producers outside OPEC to halt the collapse in oil prices.Venezuela has been hit hard by the price slide. The country’s oil income has fallen by 35 percent, President Nicolas Maduro said on state television Nov. 19. Yields on the country’s benchmark bonds due 2027 reached a six-year high this month, while foreign-currency reserves are hovering close to an 11-year low.
Ramirez met with energy ministers from Saudi Arabia, Mexico, Russia, Algeria, Iran and Qatar in the weeks leading up to the meeting in Vienna. Venezuela was prepared to cut its own oil production as part of a wider international agreement, he said Nov. 20.
Enough Pain
“There hasn’t been enough pain for non-traditional production cutters to enter into OPEC’s sphere in a meaningful way,” Jamie Webster, a Washington-based analyst at IHS Inc., said in an interview in Vienna yesterday after the talks ended. “All producers would agree they would like a higher oil price, but the capability and willingness to cut would take a great deal more co-ordination and decision-making.”Like the countries that make up OPEC, Russia depends on energy exports for revenue. The ruble is the second-worst performing currency in the world this year and the country’s central bank forecasts zero growth next year.
While Russia pumps about 10 million barrels a day, more than 10 percent of global output, much of its oil is produced by private companies. The extreme cold of Siberia’s winter makes it difficult to turn wells off and back on quickly.
“We are not Saudi Arabia, which has the ability to reduce production quickly, ramp up quickly,” Energy Minister Alexander Novak said Nov. 24 in an interview with state TV channel Rossiya 24.
Iranian President Hassan Rouhani and Russia’s Vladimir Putin agreed to cooperate together in the oil market, the Iranian oil ministry’s news service Shana said yesterday. Similar statements were made last week after Russian officials held separate talks with Saudi and Venezuelan delegations.
Saudis’ Choice
Ali Al-Naimi, Saudi Arabia’s oil minister, told reporters in the Austrian capital on Nov. 24 that “it is not the first time that the market is oversupplied” and he didn’t know what OPEC should do at the meeting.The world’s biggest crude exporter is the country that will decide whether there is a production cut by OPEC to support oil prices this week, Olivier Jakob, managing director of Zug, Switzerland-based consultant Petromatrix GmbH, said by phone.
“The Saudis are the ones who impose the line on the other OPEC members,” he said. “It is their decision to make, and nobody else’s.”
No comments:
Post a Comment