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Page added on April 16, 2016
Saudis Stick to Oil Freeze Ultimatum as Iran Stays Home
Saudi Arabia won’t restrain its oil production unless other producers, including Iran, agree to freeze output at a meeting this weekend in Doha, the kingdom’s deputy crown prince said. Iran said it had decided to stay at home.
The world’s biggest crude exporter would cap its market share at about 10.3 million to 10.4 million barrels a day, if producers agree to the freeze, Prince Mohammed bin Salman said during an interview on Thursday at King Salman’s private farm in Diriyah. On Saturday, Iran’s deputy oil minister said the country “saw no reason” to attend the talks because it needs to get back to the level it produced before international sanctions against Tehran.
The comments from Saudi Arabia and its main rival in the Middle East will cast doubt on the outcome of Sunday’s summit, where at least 15 oil ministers from the Organization of Petroleum Exporting Countries and beyond will discuss freezing output to stabilize an oversupplied market. Crude oil has rallied more than 30 percent since an agreement was first mooted in February.
“If all major producers don’t freeze production, we will not freeze production,” said Prince Mohammed, 30, who has emerged as Saudi Arabia’s leading economic force. “If we don’t freeze, then we will sell at any opportunity we get.”
Russian Outlook
Kuwait’s acting oil minister, Anas Al-Saleh, said on Saturday that he was “optimistic” about the possibility of reaching an output freeze in Doha. A Russian official said it was possible to reach a deal, regardless of Iran whose crude shipments have risen by more than 600,000 barrels a day this month. That increase has added to the pressure on producer nations to reach an agreement to prop up prices as economies from Venezuela to Nigeria reel from the market rout.
The meeting in Doha is only relevant if no deal is reached, prompting a sharp selloff in the markets, according to Ed Morse, head of commodities research at Citigroup Inc.
Ministers from Saudi Arabia, Nigeria, Ecuador, Algeria as well as OPEC’s secretary-general and Iraq’s representative had all arrived in Doha on Saturday. None wanted to comment on prospects for tomorrow’s meeting.
The credit ratings of more than 10 oil-producing nations in the developing world were placed on review in March for a downgrade by Moody’s Investors Service, which cited the shock of depressed prices on these economies. The list includes Russia, Kazakhstan, Nigeria, Angola, Gabon and five of the six Gulf Cooperation Council nations — Kuwait, Saudi Arabia, the United Arab Emirates, Bahrain, and Qatar, according to Moody’s.
Saudi Arabia’s creditworthiness was downgraded at Fitch Ratings after the plunge in oil prices. The kingdom’s rating was lowered one level to AA-, the fourth-highest investment grade, the ratings company said on Tuesday. It maintained a negative outlook for the credit, signaling the possibility of more downgrades.
Others’ Battle
“If prices went up to $60 or $70, that would be a strong factor to push forward the wheel of development,” Prince Mohammed said. “But this battle is not my battle. It’s the battle of others who are suffering from low oil prices.”
Prince Mohammed also said that Saudi Arabia isn’t concerned because “we have our own programs that don’t need high oil prices.”
The prince also outlined the amount of spare capacity that the kingdom could bring to the market, underlining its pivotal role in global oil markets.
Saudi Arabia could increase output to 11.5 million barrels a day immediately and go to 12.5 million in six to nine months “if we wanted to,” Prince Mohammed bin Salman, who is also chairman of the Supreme Council of Saudi Arabian Oil Co., said in an interview Thursday. The country pumped 10.2 million barrels a day last month, according to data compiled by Bloomberg.
Brent crude settled at $43.10 a barrel Friday in London, having rebounded by more than 50 percent from a 12-year low in January.
After OPEC abandoned its efforts to boost oil prices in November 2014, focusing instead on protecting its market share, Saudi Arabia increased production to an all-time high of more than 10.5 million barrels a day, saying that customers were asking for more crude.
Preliminary Deal
The meeting of oil producers in Doha on Sunday follows a gathering in February between Saudi Arabia, Qatar, Russia and Venezuela in which the quartet tentatively agreed to cap their production at January’s level.
“There is hope” that producers will reach an agreement in Doha, Dmitry Peskov, the Kremlin’s press secretary, said following the latest conversation between Russian Energy Minister Alexander Novak and his Saudi counterpart. Novak spoke to Saudi Oil Minister Ali al-Naimi by phone on Tuesday to discuss prospects for a production freeze, a person with direct knowledge of the matter said.
When OPEC reaches a collective consensus, “I will support them,” Prince Mohammed said.
18 Comments on "Saudis Stick to Oil Freeze Ultimatum as Iran Stays Home"
Boat on Sat, 16th Apr 2016 11:51 am
If Iran is the key to a deal the idea was a joke to begin with.
Boat on Sat, 16th Apr 2016 11:51 am
If Iran is the key to a deal the idea was a joke to begin with.
JuanP on Sat, 16th Apr 2016 1:15 pm
I don’t believe that Saudi Arabia has any unused oil production capacity left, definitely not 1 to 2 mbpd. The truth is that this meeting in Doha is basically an irrelevant nonevent. The countries participating can’t significantly increase oil production, so agreeing not to is redundant and irrelevant.
This Mohammed Bin Salman is a real prick and a guy to keep an eye on. He appears to be the most psychopathic Saudi royal of his generation. I wouldn’t be surprised if he became a horrible king one day. He has the potential to become the worst king in the KSA’s history.
This Doha meeting is nothing more than entertainment to distract the masses.
makati1 on Sat, 16th Apr 2016 6:49 pm
JuanP, you see it the same way I do. It’s about like telling the others (Iran) that they cannot sell their apples just because their orchard is now allowed to sell them. Or they can only sell so many bushels because their competitors are in financial straights and need the market.
And, I doubt that Salman will live long enough to be king. The “kingdom” may not last long enough to even need a new king.
http://www.globalresearch.ca/the-implosion-of-the-house-of-saud/5520314
Kevin Cobley on Sat, 16th Apr 2016 7:58 pm
The dysfunctional Oil market has too many stupid producers, there is 3 producer nations that produce in excess of 10mbpd or 6/16th’s of world production.
The US can’t reduce production a substantial proportion of it’s production is fracked at high cost debt repayment is their problem, volume is kept flowing in attempts to avoid bankruptcy, it’s not going to work.
Russia depends on Volume production to keep it’s economy churning, paranoid defence spending going.
The Saudis to keep aristocracy happy, defence spending running and revolutionary groups at bay.
The Big 2 Russia and Saudi Arabia would do better if they substantially cut production instead of pushing other to reduce, if Russia and Saudi Arabia cut production by 25% a total of 4.5 Mbpd prices would be back at $100 a barrel in a couple of months, the US can’t raise production any further to take advantage of higher prices the sweet spots in Bakken have already been drilled. it’s a lot better to sell 8mbpd at $100 than 11.5mbpd at $40.
The Russian and Saudi collective stupidity are the problem.
Boat on Sat, 16th Apr 2016 8:10 pm
Kevin,
Oil is a global market. Anybody with a well is equally good or bad. One could argue tar sands is the worst. Blame them Canadians or the US for buying it.
GregT on Sat, 16th Apr 2016 8:37 pm
“The Russian and Saudi collective stupidity are the problem.”
Considering that the US ramped up production by some 5M bbl/d since ’08, and the so called glut is somewhere around 1.5 M bbl/d, all that the US needs to do is to reduce that recent increase in production by around 1/4. The Russians and Saudis don’t need to do a thing.
GregT on Sat, 16th Apr 2016 8:48 pm
@Boat,
“Oil is a global market. Anybody with a well is equally good or bad. One could argue tar sands is the worst. Blame them Canadians or the US for buying it.”
Yup, pretty much a no brainer. However, WTF does this have to do with what the other Kevin said above?
makati1 on Sat, 16th Apr 2016 9:23 pm
Kevin keeps talking about $100 oil like it is a good thing. Doesn’t he realize that it will collapse the world economy and take down all of the oily mess in one fast drop, never to return? I guess he has not considered that the economy/debt rules the world today, not resources.
onlooker on Sat, 16th Apr 2016 9:33 pm
Yep Kevin and others do not seem now to understand that the interrelation of Oil with the Economy is what is fundamental that this relation is now a drag on economic prosperity. In the same way that consumers could not handle 100 dollars Oil, producers cannot handle 40 dollar Oil. They’re is now no sweet spot. Favor one sector, the other gets hurt. Such is the way when your whole economy is running on fumes literally and figuratively.
Apneaman on Sat, 16th Apr 2016 9:54 pm
“Russia depends on Volume production to keep it’s economy churning, paranoid defence spending going.”
Why has Russian defense spending fallen?
Russia is no longer among the world’s top three military spenders, say experts from the Stockholm International Peace Research Institute. Why has this happened and how does it compare to global trends?
http://rbth.com/defence/2016/04/13/why-has-russian-defense-spending-fallen_584397
Tomgram: William Hartung, What a Waste, the U.S. Military
How Not to Audit the Pentagon
Five Decades Later, the Military Waste Machine Is Running Full Speed Ahead
“From spending $150 million on private villas for a handful of personnel in Afghanistan to blowing $2.7 billion on an air surveillance balloon that doesn’t work, the latest revelations of waste at the Pentagon are just the most recent howlers in a long line of similar stories stretching back at least five decades. Other hot-off-the-presses examples would include the Army’s purchase of helicopter gears worth $500 each for $8,000 each and the accumulation of billions of dollars’ worth of weapons components that will never be used. And then there’s the one that would have to be everyone’s favorite Pentagon waste story: the spending of $50,000 to investigate the bomb-detecting capabilities of African elephants. (And here’s a shock: they didn’t turn out to be that great!) The elephant research, of course, represents chump change in the Pentagon’s wastage sweepstakes and in the context of its $600-billion-plus budget, but think of it as indicative of the absurd lengths the Department of Defense will go to when what’s at stake is throwing away taxpayer dollars.”
http://www.tomdispatch.com/blog/176126/tomgram%3A_william_hartung,_what_a_waste,_the_u.s._military/
Boat on Sat, 16th Apr 2016 10:33 pm
mak,
I am in favor of global carbon tax that would push the price of oil to $100. That would push the world to an electric economy much quicker. It’s where were headed anyhow. No fear of crash here.
Boat on Sat, 16th Apr 2016 10:33 pm
mak,
I am in favor of global carbon tax that would push the price of oil to $100. That would push the world to an electric economy much quicker. It’s where were headed anyhow. No fear of crash here.
GregT on Sat, 16th Apr 2016 10:52 pm
We’re already in an electric economy Kevin. The electric economy is a byproduct of fossil fuels usage. No fossil fuels-no modern industrial electrified economy. Where we are headed will not even remotely look anything like what we in the west are currently familiar with. When the crash happens, and it will, food, water, and security will be of everybody’s greatest concerns. The needs, not the niceties.
Truth Has A Liberal Bias on Sat, 16th Apr 2016 11:22 pm
Ok retards you do realize that electricity is an energy carrier not an energy source right? Where you gonna get your electricity from, unicorn farts? Suggesting that an ‘electricity economy’ is an alternative to a ‘fossil fuel economy’ merely highlights what complete fucking retards you guys are?
makati1 on Sat, 16th Apr 2016 11:58 pm
Boat a ‘carbon tax’ would only be a trading of pollution rights and charging for it. Not going to happen. The living world is bring destroyed by pure greed on the part of a few at the expense of the rest. Nothing else.
makati1 on Sun, 17th Apr 2016 12:01 am
Truth, the ‘retards’ are immune to truth or reality. They only think to the point that starts to disagree with their ideas and then they stop. They know that to continue down the path of total systems would be to point out their ideas as unworkable in the real world.
peakyeast on Mon, 18th Apr 2016 5:44 pm
@mak: You give them too much credit.