OPEC lost interest in market

Oil&Gas Materials 27 May 2015 20:16 (UTC +04:00)
Today, OPEC countries are no longer interested in playing the role of a guarantor of stability in the oil market and price support.
OPEC lost interest in market

Baku, Azerbaijan, May 27
By Aygun Badalova - Trend:

Today, OPEC countries are no longer interested in playing the role of a guarantor of stability in the oil market and price support, Alexei Kokin, the senior analyst on oil and gas sector at the Russian company UralSib Capital, told Trend May 27.

"None of the major OPEC members wants to bear the costs of the actual maintenance of prices at a certain level," he said.

They, as Kokin said, on the contrary are ready to provide market for themselves and with help of low prices, to edge out of the market those producers, which bear the high costs of exploration and oil production.

Speaking about OPEC's upcoming June meeting, Kokin said he believes the cartel's member countries will make a decision to keep the production quotas.

"The quotas will remain at the level," he said, adding, "The Gulf countries - Saudi Arabia, Kuwait and the UAE are not going to cut production."

Kokin said those countries' plans for drilling and the production capacity expansion suggest that they will probably continue to fight for market share even at a low price.

He also said there will be pressure from countries, such as Venezuela and perhaps Iran, for which the low oil prices are particularly unacceptable.

"However, no one will seriously support the decrease of quotas," Kokin added.

Venezuela is one of the countries that greatly suffer from the crisis of oil prices. Earlier, this country's president said Venezuela is preparing a draft agreement for the OPEC members on keeping oil prices at a high level. The fulfillment of the agreement's terms will allow reaching and keeping the prices at $100 per barrel, he said.

It is expected to work out the document by June in order to present it in the next OPEC summit on June 5.

OPEC member states will hold the next meeting in Vienna, June 5 to discuss the current situation in the oil market and adopt decisions on the cartel's oil production quota.

Currently, OPEC's oil production quota stands at 30 million barrels per day.

OPEC's oil supply has increased by 160,000 barrels per day in April and stood at 31.21 million barrels per day, which is the highest figure since September 2012, according to the International Energy Agency.

Currently, the oil prices in the market vary within $63 per barrel for North Sea Brent crude and $58 per barrel for the US WTI crude.

Edited by CN

Follow the author on Twitter: @AygunBadalova