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Page added on June 4, 2015
OPEC finds oil output consensus: ‘Don’t rock the boat’
OPEC is set to carry on pumping oil nearly flat-out for months more, content that last year’s shock market therapy has revived demand and knocked back growing competition.
With oil prices having stabilised at around $65 a barrel, some $20 above their January lows, there’s little appetite within the Organization of the Petroleum Exporting Countries to modify production limits or address Iran’s request to give it more room in the market as sanctions ease.
“There is consensus among Gulf OPEC countries, and others, to keep the ceiling unchanged,” a senior Gulf OPEC delegate told Reuters late on Tuesday after an informal meeting of the four core Gulf Arab OPEC members earlier in the day.
Iraqi oil minister Adel Abdel Mahdi said there was “optimism and general acceptance with the current situation”.
The group meets on Friday following a two-day seminar featuring the chief executives of the world’s biggest energy groups, including BP (BP.L) and Exxon (XOM.N), companies whose fortunes have been abruptly altered by OPEC’s decision to abandon efforts aimed at sustaining oil prices at more than $100 a barrel in favour of defending market share.
“Nobody wants to rock the boat,” the Gulf source said. “The meeting is expected to be smooth sailing.”
OPEC Secretary-General Abdullah al-Badri said on Wednesday that it would likely be a brief meeting.
“Everything is very clear,” Badri said.
That marks a change in tone from OPEC’s last meeting in November 2014, when Venezuela and others mounted an unsuccessful bid to convince Saudi Arabia and its Gulf allies to tighten the taps on supply.
Instead, Saudi Arabia laid out its new laissez faire approach, saying it will no longer consider cutting output without the cooperation of non-OPEC producers such as Russia. This time, calls for collaboration have been muted as most ministers look forward to a more balanced second half.
“You can see that I’m not stressed, I’m happy,” Saudi oil minister Ali al-Naimi said on Monday.
OPEC members are producing more than 1 million barrels per day (bpd) above the group’s collective ceiling of 30 million bpd, with Saudi output at its highest in at least three decades, a Reuters survey showed, leaving the group little room to pump more. [O/POLL]
IRAN’S RETURN
There may still be some choppy moments. Iran is seeking to clear space for its gradual return to the oil market after years in which Western sanctions halved its oil exports to as little as 1 million bpd.
“If OPEC members want to keep prices at the same level, we expect them to make room for Iranian oil,” oil minister Bijan Zanganeh was quoted as saying by Shana news agency.
But he told an OPEC seminar in Vienna he was confident that other producers would “coordinate and consider” Iran’s return, which would “not have a negative impact” on the market.
While Zanganeh said Iran would be pumping another 500,000 bpd within a month of lifting sanctions and up to 1 million bpd within six or seven months, most analysts believe it will be months or up to a year for any significant increase to occur.
That’s even if Iran and world powers meet a June 30 deadline for finalising a pact on curbing Tehran’s nuclear program.
“Due to heightened uncertainty with an (Iran nuclear) deal, we think OPEC is likely to take a wait-and-see approach to the prospect of additional oil,” analysts at Barclays wrote.
Some analysts, including those at Morgan Stanley, have raised the remote possibility that OPEC might surprise the market by increasing the output ceiling. Some of OPEC’s 12 members have dismissed that option.
13 Comments on "OPEC finds oil output consensus: ‘Don’t rock the boat’"
Plantagenet on Thu, 4th Jun 2015 7:40 pm
The more OPEC pumps and sells, the faster OPEC moves towards peak oil.
Yes, sure the world is in a glut with low gasoline prices now…..but how much longer will that last?
Nony on Thu, 4th Jun 2015 7:53 pm
http://www.wsj.com/articles/oil-prices-fall-ahead-of-opec-meeting-1433408682
Perk Earl on Thu, 4th Jun 2015 11:00 pm
‘OPEC finds oil output consensus:’
Wait a minute, I thought OPEC was no longer considered viable because they failed to do what Non-OPEC wanted them to do; act as swing suppliers reducing exports to keep oil price high to the advantage of US frackers.
Apneaman on Fri, 5th Jun 2015 5:02 am
ANALYSIS
OPEC oil glut is shattering Harper’s superpower dream
Producers’ brinksmanship has worked, and Canada is cutting production
http://www.cbc.ca/news/business/opec-oil-glut-is-shattering-harper-s-superpower-dream-1.3097133
Dredd on Fri, 5th Jun 2015 6:34 am
OPEC finds oil output consensus: ‘Don’t rock the boat’
Like that really helped the Titanic.
JuanP on Fri, 5th Jun 2015 12:49 pm
The OPEC meeting produced no changes, as was predictable, since changing the quota would require agreement. OPEC may never again change their 30 million production quota. Member countries will continue ignoring OPEC and producing whatever they need, want and/or can. Iran, and all other OPEC countries, will sell their oil one way or another once it becomes irreplaceable in the global market, and that day is fast approaching.
BobInget on Fri, 5th Jun 2015 1:04 pm
After a week of meetings of the Organisation of the Petroleum Exporting Countries (Opec) in Vienna, one thing is clear: Iran and Saudi Arabia are on a collision course that could eventually break the world’s largest oil producing group apart.
Faced with Saudi Arabia’s stubborn determination to keep Opec pumping at full choke, Iran’s oil minister Bijan Zanganeh has upped the stakes in this game of double bluff between the Middle East’s two dominant political forces. He has confidently stated that the Islamic Republic will pump an additional 1m barrels per day (bpd) of crude within months of nuclear sanctions being lifted by the West.
Opec signals oil price rebound as demand picks up
Opec: we were right not to cut oil supply, despite price slump
Opec ‘will bow to the Saudis’ and keep oil prices low
The move – assuming that Iran agrees to all US demands to curb its nuclear ambitions by the deadline on June 30 – effectively fires the starting gun in a race among Opec’s most powerful producers including Iran, Saudi Arabia and Iraq to gain a bigger share of the market. It is a race that will be run regardless of the havoc it will cause within the group’s smaller producers who face complete economic meltdown.
Tensions are running high between oil giants Iran and Saudi Arabia
Instead of emphasising consensus and a mutually beneficial production policy to work for all of Opec’s 12 members, Mr Al-Naimi now talks in terms of countries being “free to do what they want”. This begs the question: what is the point of Opec if it is just a platform for Iran and Saudi Arabia to wage economic war against each other to the detriment of all the group’s other members?
In Riyadh, the country’s new ruler, King Salman bin Abdulaziz al-Saud, faces the risk of his family’s closest allies, the US, suddenly changing sides. It could see them shifting their support to an increasingly reformist Iran should a deal to lift sanctions be reached this summer. Such a move could see political power in the Middle East tilt irreversibly towards the Shia Muslim majority in the region. That could ultimately threaten the future of the House of Saud.
Saudi Arabia’s political dilemma has been further complicated by Iranian support of Houthi rebels which it is fighting in Yemen. It also faces encroachment within its own borders of terrorists connected to the Islamic State of Iraq and the Levant (Isil). Throughout the region, the kingdom and its Sunni allies appear under siege, while in Iraq only Iranian forces appear capable of holding back the Sunni-Muslim Isil horde.
GregT on Fri, 5th Jun 2015 1:06 pm
planter spewed,
“Yes, sure the world is in a glut with low gasoline prices now”
Gas prices at the pump here today planter are $1.32/L, 17 cents off of the all time high of$1.49/L. Ten years ago we were paying $.78/L.
Gasoline prices are not low. Enough with the nonsense.
Northwest Resident on Fri, 5th Jun 2015 1:52 pm
GregT — Planter without nonsense is like a Pope without religion, like a night without darkness, like a fart without a stink. 🙂
In Planter’s words: Get it now? hahahahaha. Cheers!
Davy on Fri, 5th Jun 2015 2:00 pm
Greg, my wife says sometimes she has farts that don’t stink so that comparison doesn’t always work.
Perk Earl on Fri, 5th Jun 2015 4:20 pm
“Faced with Saudi Arabia’s stubborn determination to keep Opec pumping at full choke, Iran’s oil minister Bijan Zanganeh has upped the stakes in this game of double bluff between the Middle East’s two dominant political forces. He has confidently stated that the Islamic Republic will pump an additional 1m barrels per day (bpd) of crude within months of nuclear sanctions being lifted by the West.”
I doubt very much the sanctions against Iran will be lifted, as the R’s in DC will not cozy up to that idea anytime soon. What’s probably going to happen is the sanctions will not get lifted and Iran will get impatient, angry and go back to trying to make the bomb.
Perk Earl on Fri, 5th Jun 2015 5:21 pm
“Faced with Saudi Arabia’s stubborn determination to keep Opec pumping at full choke, Iran’s oil minister Bijan Zanganeh has upped the stakes in this game of double bluff between the Middle East’s two dominant political forces. He has confidently stated that the Islamic Republic will pump an additional 1m barrels per day (bpd) of crude within months of nuclear sanctions being lifted by the West.”
I doubt very much the sanctions against Iran will be lifted, as the R’s in DC will not cozy up to that idea anytime soon. What’s probably going to happen is the sanctions will not get lifted and Iran will get impatient, angry and get back to trying to make the bomb.
Perk Earl on Fri, 5th Jun 2015 5:22 pm
Not intended, double posted.