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Expert: News on OPEC cuts "cosmetic", no real market impact

Oil&Gas Materials 23 November 2016 11:27 (UTC +04:00)
OPEC has too many competing agendas within it as an organization to effectively manage oil output.
Expert: News on OPEC cuts "cosmetic", no real market impact

Baku, Azerbaijan, Nov.23

By Leman Zeynalova – Trend:

OPEC has too many competing agendas within it as an organization to effectively manage oil output, Sam Barden, the director of SBI Markets, an international commodity trading and advisory company, told Trend Nov.23.

“Nigeria and Libya want to increase output for themselves, as does Iran and Iraq,” he said, adding that any cuts from Saudi Arabia are more likely to be seasonal reduction rather than actual output cuts.

“I think any production freezes, if agreed, will be impossible to implement,” said Barden.

Regarding the recent optimism on OPEC’s Vienna meeting, the expert said that there always has to be some reconciliation between what is agreed at OPEC in notional terms and what is the outcome in realistic terms.

“The market is always looking for positive news, and producers and their traders obviously want higher oil prices rather than lower oil prices,” said Barden. “Mostly the news on OPEC cuts is “cosmetic” or window dressing rather than having any real impact on the market.”

OPEC will debate an oil output cut of 4.0-4.5 percent for all of its members except Libya and Nigeria next week.

In September, the Organization of the Petroleum Exporting Countries agreed to reduce production to between 32.5 million and 33.0 million bpd from OPEC's own latest production estimates of 33.64 million bpd.

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