Opinion

Counting Down to Vienna


image
 

Almost everyone seems to agree that US$80/b – at least in this current environment – is not conducive for the oil business. While oil producing countries are reaping benefits right now, they are also worried that prices sustaining at this level will cause demand destruction in key markets like China and India, which have underpinned global oil growth over the last year. They are also, correctly, worried that the longer oil stays at this level, the greater the reaction by US shale producers will be, causing another crash further down the line. OPEC is worried that this derails their carefully calculated alliance over the past 18 months that has seen an unprecedented level of cooperation and that implosions in Venezuela and sanctions against Iran will exacerbate the situation. And most of all, American President Donald Trump, who took to Twitter once again recently to accuse OPEC of colluding to keep prices high – as the Republicans worry that high pump prices for gasoline over summer will further erode political support in the upcoming midterm elections.

So as OPEC and the NOPEC alliance meet once again in Vienna on Friday (June 22) for their bi-annual meeting, the mood of the meeting has swung from the need to support oil prices to the need to manage oil prices. On paper, OPEC's heavyweight fighter – Saudi Arabia – is pushing for higher production, supported by its allies Kuwait, the UAE and Algeria. Several other big producers including Iran, Iraq and Venezuela, however, don't seem to agree and have threatened to veto any proposal for a production increase, with Iran stating that ‘we do not need to appease Trump and the market is well-supplied'. Russia, the leading producer in the NOPEC alliance is also pushing for higher production, and the countries in NOPEC look liable to be whipped into line. But OPEC decisions rely on consensus and if the countries cannot come to one, unilateral actions could trigger a return to the destructive free-for-all attitude within OPEC where producers compete for market share and depress prices as a result. After enduring three years of low prices, no one in the industry wants a return to that.

At the opening match of the World Cup 2018 in Moscow, Vladimir Putin and Crown Prince Mohammed bin Salman were spotted getting chummy, despite Russia thrashing Saudi Arabia 5-0. This has fuelled speculation that the two producers could be forging an alliance separate to OPEC, possibly jeopardising coordination within the oil cartel. Despite Iran and Iraq being very vocal about not agreeing to any supply increase, Russia has suggested that OPEC and NOPEC could begin gradually increasing oil production starting from July 1. That itself is not controversial – the November 2017 meeting predicted this, stating then that the world market was rebalancing more quickly than expected and a review of the supply freeze was required in June 2018. That requires cooperation, but as it stands now OPEC looks to be divided into two cooperatives – Russia, Saudi Arabia and their allies on one side and Iraq, Iran and Venezuela on the other. The butting of these heads will define the upcoming meeting and one can only hope that they will come to an agreement, given that previous disagreements have proved damaging.


Visit source site

https://nrgedge.net/article/1529418305-counting-do...

oil priceViennaDemandsupplynrgedge articlesnrgedgetradingForecastOPECProjections

More items from easwaran


Q2, 2018 - Accelerated Profit Growth in the Oil & Gas Sector

  In a quarter where oil prices were at their strongest levels since early 2015, the oil industry largely reported a healthy bump in revenues and profits. Investors and institutions had anticipated this, expecting strong results, but although numbers were healthily in the black all around, not e ...

Easwaran Kanason


Posted 1 month agoOpinion > ProfitsQ2Oil Companies +6

BP’s US$10.5bn acquisition of shale oil asset re-confirms the importance of shale oil in the energy market

  Shale oil is the most significant development in the energy industry ever since coal was replaced by oil as the principal fuel. The noteworthy rise of shale oil extraction over the last few years has taken the market by surprise. The combination of drilling techniques together with developed h ...

Easwaran Kanason


Posted 1 month agoOpinion > Shale GasTight OilOil And Gas Industry Latest News +1

Oil Royalties in Post-Election Malaysia

Last Updated: August 1, 2018   136 views    Business Trends   Here is a brief background story of the growing debate about the allocation of oil royalties in select states in Malaysia.  The election that swept the former ruling coalition out of power in Malaysia three months ago was h ...

Easwaran Kanason


Posted 1 month agoOpinion > PETRONASMalaysiaPakatan Harapan +5

List of Upstream Operators in Malaysia (PSC Contractors)

  Petronas Carigali Conoco Philips Lundin Petroleum JX Nippon Mubadala Petroleum Ophir Energy HESS Kebabangan Petroleum Operating Company, KPOC TOTAL E&P RHP Mukah  Enquest Petroleum Sapura Energy Repsol Exxon Mobil Shell PEXCO N.V. Murphy Oil Ophir Production PCPP Operating C ...

Easwaran Kanason


Posted 1 month agoOpinion > MalaysiaupstreamOil Companies

5+ Do's and Don'ts, Dress code and Interview Aesthetics for the Perfect First Impression!

  An interview offers you a chance to make an impression on a prospective employer. Since it's often the first impression that matters most, what you wear to an interview becomes a powerful tool for projecting an image of skill, competence, and experience. Every industry has expectations when i ...

Easwaran Kanason


Posted 1 month agoOpinion > Interview Dos And Don'tsInterview Dress Code
All posts from easwaran