12:23 GMT +316 October 2019
Listen Live
    Global oil prices continued falling Friday amid a worsening forecast by OPEC on oil demand by 2035

    OPEC Oil Output Deal at Vienna Unlikely Amid Saudi Push for Market Share

    © AP Photo / Hasan Jamali
    Get short URL
    0 22

    Organization of the Petroleum Exporting Countries (OPEC) members are unlikely to strike a deal during the summit in Vienna this week to cap production levels because Saudi Arabia is committed to pumping oil to retain market share and is gambling on future low North American output, experts told Sputnik.

    WASHINGTON (Sputnik) — Members of OPEC will convene in Vienna, Austria on Thursday to discuss a plan to freeze oil production, two months after the previous attempt failed amid Saudi Arabia’s reversal.

    "There’s not going to be any [oil output] agreement," Tradition Energy Senior Analyst Gene McGillian told Sputnik on Tuesday. "It’s pretty clear that the Saudis want to produce as much oil as they can to maintain their new policy… the idea that they want to keep their market share."

    Saudi Arabia’s strategy, McGillian noted, is partly being driven by Iran’s goal to ramp up production to pre-sanctions levels, although Tehran is drawing closer to that mark.

    The Saudis also calculated that higher cost producers, particularly in North America, would have a tough time competing.

    "The drop in US production levels to… about 8.7 million barrels is probably a pretty good indicator that they were right," McGillian noted.

    The recent crude oil rally from $30 to $50 a barrel, McGillian argued, is largely due to forward expectations about declining North American production levels, but questions loom over whether this means oil supply will "tighten" in the long run.

    "What we are going to find out in the next couple months is whether that fundamental [supply] picture has tightened and this rally is justified or… [if] we still have a glut on our hands," McGillian suggested.

    Brown University Professor Jeff Colgan told Sputnik that he expects very little to come out of Thursday’s OPEC summit in Vienna.

    "OPEC is unlikely to come to any agreement to change the status quo, and even if they do, it’s very doubtful it will be enforced," Colgan stated.

    The big news ahead of the summit, Colgan added, is that Saudi Arabia has a new oil minister and this is his first meeting, although it will not affect the outcome.

    The OPEC meeting is being held against a background of steadily reviving oil prices, which hit $50 a barrel on Tuesday, despite Saudi Arabia’s efforts to drive global prices down by dramatically expanding its own production.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.


    Positive Oil Forecasts Create Disincentive for OPEC to Cap Production
    OPEC Likely to Leave Oil Output Unchanged
    Iranian Petroleum Minister to Participate in Vienna OPEC Meeting
    oil prices, OPEC, Saudi Arabia, Vienna
    Community standardsDiscussion
    Comment via FacebookComment via Sputnik