It is unlikely that OPEC can come to a firm and workable decision in its 171st session scheduled for Nov. 30 in Vienna, Fereydoun Barkeshli, president of Vienna Energy Research Group in Austria and the National Iranian Oil Company’s former general manager for OPEC and international affairs, told Trend Nov. 29.
OPEC in its extraordinary session in Algerian on September 28, decided to fix its production at the level of 32.5 million barrels per day (mbpd).
The Cartel’s current output stands at 33.6 million barrels per day, so the members need to decrease the production level by 1.1 mbpd to materialize the agreed output level.
Members of OPEC and a number of non-OPEC producers, mainly Russia, have been meeting frequently since OPEC’s 170th summer conference where ended in disagreement and a roll-over, Barkeshli said.
However, the organization members constantly kept negotiating and lobbying amongst themselves and Russia, in order to arrive at a consensus to find ways and means to stabilize the market, he added.
OPEC Secretary General Mohammad Sanusi Barkindo played an important role and traveled to several capitals in order to evaluate each country’s position and the limits that they could cope with for a cut, Barkeshli said.
The idea of freeze crude oil output first was raised by Saudi Arabia which was immediately supported by Russia, because both countries had already reached the maximum capacity that they could afford to produce, he said, adding that both countries exerted pressure on Iran and then Iraq to join in on the output freeze idea.
“Iran had been deprived from production and exports due to international sanctions. As such, it was virtually impossible on domestic and international ground to accept the freeze output for the Islamic Republic,” said the expert.
“Instead, the Islamic Republic asked for the organization to return to its 2014 agreed production ceiling and official allocated quotas, the expert said. “To this, Saudi Arabia responded by the necessity that Russia must join the fold and reduce the production.”
While responding to a question about effects of the recent US presidential election on the oil market, Barkeshli said that Donald Trump, president-elect of the US, has not yet been clear on his oil policy.
He further said that traditionally, Republicans in the US come from oil industry background and as such are supportive of the oil sector.
This has not yet been clarified by the new administration, Barkeshli said, adding that the oil industry decisions and relationships are somehow interconnected and as such policies of one major producer or companies affect the entire chain.
While not being optimistic about a workable result of the OPEC’s decision, the expert said that “OPEC members currently have one common issue which is “everybody need money and need it badly.”