08:33 GMT18 January 2021
Listen Live
    Business
    Get short URL
    197
    Subscribe

    The two-day OPEC meeting in Vienna, attended by several non-OPEC oil producers, has concluded without any substantial result, albeit the participants have demonstrated their willingness to continue the joint effort to lift the global oil prices off from their currently low levels.

    Kristian Rouz – Disagreements between the OPEC members over the scale of output cuts, and the fragility of the preliminary production curb deal, have rendered other international crude producers unenthusiastic over the proposed global decrease in oil supply.

    OPEC members are currently lacking a consensus over how to implement the agreed-upon cuts in oil output, meanwhile, non-OPEC oil exporters are seeking ways to capitalize on the situation selling more crude at a higher price, increasing their market share.

    While every oil-producing nation is cautious about any deal proposals as potentially giving advantage to their competitors, the current level of oil prices is hurting Iran, Venezuela, and Saudi Arabia, whilst certain non-OPEC producers could sustain lower prices due to their lower fiscal and commercial breakeven threshold, determined by production costs in every individual nation. Subsequently, a comprehensive deal to curb oil output within OPEC and outside of it is deemed a massive diplomatic challenge without any certainty to it.

    The two-day OPEC meeting in Vienna concluded without any decisive progress over the deal to curb oil output. The negotiations are set to continue in late November, and the positive effects of the preliminary deal agreed upon within OPEC a month ago are starting to vane. Non-OPEC nations, namely, Azerbaijan, Brazil, Kazakhstan, Mexico, Oman and Russia did not make any commitment to curb oil output.

    They might be awaiting a more decisive action from OPEC before joining the deal, or might as well be expecting the oil prices to gain amidst the OPEC deal anticipations in order to boost their export revenues as the expense of the hurting oil cartel.

    "Anything short of implementation of this accord could lead to the elongation of the rebalancing process, with further deterioration of financial conditions and setbacks in investments extending into a third year, which would be unprecedented," OPEC Secretary General Mohammed Barkindo said. "We should be calling for maximum commitment from all OPEC and non-OPEC countries."

    The non-OPEC oil producers, who attended the Vienna meeting, put out roughly 19.6 mln barrels per day (bpd) in 2015 combined, half of the collective OPEC output that year. If they opt to join the production cut deal, energy market is poised to become more expensive amidst the regulated global competition.

    However, in the meantime, oil prices have been jittery post-meeting.

    The representatives of Oman said they would join the deal after OPEC makes fixed internal arrangements between its members. Oman is producing roughly 1 mln bpd. Brazil, who attended the meeting as an observer, is planning to actually boost oil output by 290,000 bpd to 2.9 mln bpd in 2017. Kazakhstan is planning to increase oil output next year as well.

    "We have to agree on the real numbers," said Magsum Mirzagaliev, Kazakhstan's vice minister of energy. "It is important that we meet once again with detailed numbers. We agreed that we have to meet in 3-4 weeks with numbers, because every country has his own opinion," he added.

    Brent crude was trading at roughly $50/bbl on Saturday as the talks were nearing an end without any breakthrough announcements.

    The intra-OPEC tensions are stemming from the disagreement between Iran, willing to retain and expand its market share, and Saudi Arabia, seeking to increase oil revenues to ease its fiscal struggle.

    Russia, the world’s largest oil producer in 1Q16, insists the internal OPEC deal to decrease oil output should precede any broader global oil curb agreements.

    "Russia is ready but they want to see in detail (the) figures agreed for yesterday," an unnamed source from the OPEC meeting told Reuters.

    Related:

    Next OPEC, Non-OPEC Meeting to be Held November 25-26 - Azerbaijani Minister
    OPEC Secretary General Appreciates Russia’s Role in Stabilizing Oil Market Talks
    Russian Energy Minister Considering Meeting With OPEC Ministers in Doha
    Tags:
    oil output, OPEC, Oman, Vienna
    Community standardsDiscussion