OPEC Members 'See' No Need For Any Output Cuts
(MENAFN- Arab Times) Almost everyone is in agreement that the OPEC meeting, which is scheduled to be held next week, will be short due to lack of need for any action to be taken.
As a matter of fact, why should the organization do anything when the oil price is around $60 per barrel, which is far better than its price of $45 per barrel for over three months? Even though every OPEC member is producing to the maximum, they all seem to find the current situation satisfactory and suitable.
In fact, no one had expected the organization's decision to not reduce production, which was issued at its last meeting, would turn out to be successful. Now everyone is onboard and does not care about the production cuts.
OPEC's decision to relinquish its historical role of managing the oil market turned out to be a success, and it unified its members within a very short time. Initially, it was not accepted due to poor results with oil prices dropping all the way down to $45 per barrel, but the whole idea was to stop the shale oil sector from growing and eating into OPEC's market share.
It is very difficult to identify the actual results; even though some small-level owners went bankrupt, majority of them are safe. It is bound to be a long-term struggle unless the world demand for oil increases to such an extent that all producers can be accommodated at a time.
Regarding the meeting to be held next week in Vienna, OPEC will not be required to take any action unless the oil prices become less than $60 with increase in supply especially after the international sanctions imposed on Iran are removed and with increased production of Iraqi oil as well as Saudi Arabia continuing its maximum production of 10.3 million oil barrels per day. Such questions may not be tackled on the OPEC table but it will most likely be included in the minister's private meetings and discussions.
The current situation of the oil market is not alarming; in fact, it is stable, with the financial speculators taking full advantage of the suppliers' inability to manipulate the oil prices as they please, and in accordance with changes in the US dollar or political events occurring in all directions or any changes in the oil inventory level in the US.
OPEC will end its meeting within a very short time after which it will issue a communiquÈ to announce its satisfaction and to urge non-OPEC oil producers to cooperate and share any production cuts in order to improve the oil prices. This will also be of great help to other expensive oil producers to invest, grow and compete with OPEC and take over its market share. However, it could end up becoming quite a nightmare for OPEC to manage newcomers producing non-conventional oil.
Of course, there are no easy solutions to OPEC's concerns. The only way out will be for the global demand to outstrip supply, which however could take few more years. For the time being, the organization should relax and enjoy its upcoming meeting next week in Vienna without any pressure. Sometimes, doing nothing could be the best option available.
As a matter of fact, why should the organization do anything when the oil price is around $60 per barrel, which is far better than its price of $45 per barrel for over three months? Even though every OPEC member is producing to the maximum, they all seem to find the current situation satisfactory and suitable.
In fact, no one had expected the organization's decision to not reduce production, which was issued at its last meeting, would turn out to be successful. Now everyone is onboard and does not care about the production cuts.
OPEC's decision to relinquish its historical role of managing the oil market turned out to be a success, and it unified its members within a very short time. Initially, it was not accepted due to poor results with oil prices dropping all the way down to $45 per barrel, but the whole idea was to stop the shale oil sector from growing and eating into OPEC's market share.
It is very difficult to identify the actual results; even though some small-level owners went bankrupt, majority of them are safe. It is bound to be a long-term struggle unless the world demand for oil increases to such an extent that all producers can be accommodated at a time.
Regarding the meeting to be held next week in Vienna, OPEC will not be required to take any action unless the oil prices become less than $60 with increase in supply especially after the international sanctions imposed on Iran are removed and with increased production of Iraqi oil as well as Saudi Arabia continuing its maximum production of 10.3 million oil barrels per day. Such questions may not be tackled on the OPEC table but it will most likely be included in the minister's private meetings and discussions.
The current situation of the oil market is not alarming; in fact, it is stable, with the financial speculators taking full advantage of the suppliers' inability to manipulate the oil prices as they please, and in accordance with changes in the US dollar or political events occurring in all directions or any changes in the oil inventory level in the US.
OPEC will end its meeting within a very short time after which it will issue a communiquÈ to announce its satisfaction and to urge non-OPEC oil producers to cooperate and share any production cuts in order to improve the oil prices. This will also be of great help to other expensive oil producers to invest, grow and compete with OPEC and take over its market share. However, it could end up becoming quite a nightmare for OPEC to manage newcomers producing non-conventional oil.
Of course, there are no easy solutions to OPEC's concerns. The only way out will be for the global demand to outstrip supply, which however could take few more years. For the time being, the organization should relax and enjoy its upcoming meeting next week in Vienna without any pressure. Sometimes, doing nothing could be the best option available.
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