Oil producers, both OPEC and non-OPEC members
are to hold talks regarding the oil prices on April 17 in the Qatari
capital Doha, said Mohammed Bin Saleh energy minister of Qatar. Three
members of the OPEC however denied having received any invitation. No
date for the meeting has been finalized yet, Bloomberg reported citing
two people close to the matter.
According to a statement by Mohammed Bin Saleh who is also the
president of OPEC presently: ”This comes as a follow-up to the meeting
that was held last month in Doha between Qatar, Saudi Arab, Russia and
Venezuela at which they proposed an accord to freeze oil output at
January 2016 levels and called on other producers to do so.”
Last month, Russia and Saudi Arabia – two of the world’s largest oil
producers held talks regarding the oil glut taking an adverse toll
globally. The meeting held in Doha between Saudi Arab- the de facto
leader and Russia resulted in freezing the oil production at January
levels, which was mutually consented by the oil producers. Venezuela
persuaded Iran, Russia, and Saudi Arab to hold discussions regarding oil
production so as to mitigate the imbalance between demand and supply in
the oil market. Crude prices surged following the meeting on Feb 16.
So far, around 15 oil producers- OPEC and non-OPEC, that
contribute about 73% of the global oil production are supporting the
cutting back of supply. Ali al-Naimi, Saudi Arab’s oil minister and
Alexander Novak of Russia will hold talks on phone on Wednesday, a
source told Bloomberg.
Political pressure to increase crude oil prices has built up on the
oil producers and thus the meeting will go ahead even without the
support of Iran, according to OPEC sources. Kuwait however objected to
this expressing that all major oil producers should be part of the
meetings that is to be held next month.
The depressed crude oil environment is largely owing to the
oversupplied market and the slow growth in demand. Iran not being part
of the talks will not be ideal as the oil rich giant possesses a major
share in the global oil output. After the sanctions on Iran have been
uplifted, it wants to boost its oil production to pre-sanction levels.
Until then, the oil rich nation is not up for any output cuts. “I have
already announced my view regarding the oil freeze and I’m saying now
that as we have not reached four million in production, they should
leave us alone. When we reach this level of production, we can then
co-operate with them,” Mr. Zanganeh, Iran’s Oil Minister said on Sunday.
On the other hand, OPEC sources believe that
Iran not joining to cut back output levels is not a deal breaker. "It's a
setback but it will not necessarily change the positive atmosphere that
has already started," said one OPEC source from a major producer.
On Monday, Mr. Zanganeh met Mr. Novak in Tehran to discuss a separate
oil and gas swap deal. Mr. Novak expressed that major oil producers
should come together to stabilize the oil prices. However, he expressed
that he understands Iran’s position “to increase production and revive
its share in the global markets” as its production suffered extensively
when the sanctions were imposed.
Oil prices have sunk around 70% since peaking at $115 per barrel in
June 2014. As of now, with oil prices trading below $40 a barrel- Brent
currently trades at $39.22 per barrel, while West intermediate Texas
trades at $36.97 per barrel, the oil companies are finding it very hard
to cope up with the declining crude oil prices. As a result of the low
crude oil prices, profit margins and the overall financial position of
oil companies’ especially big oil are on the downhill with their shares
plunging drastically.
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