OPEC cold fact: analysts hope it ceases to exist

OPEC cold fact: analysts hope it ceases to exist

Baku, Azerbaijan, Nov. 19

By Aygun Badalova - Trend:

OPEC will hold a meeting in Vienna on November 4. Despite some hopes, attention and importance which is being attached to that upcoming event, most of the analysts share the common view - nothing new will happen.

Allure of OPEC production deal is a mirage - that is the title of the report, published by the analysts of the US JP Morgan bank, where they said OPEC is unlikely to shift its strategy, though "several headlines have tempted market participants with the possibility for production cuts".

Sam Barden, the director of Wimpole International, an energy market development company thinks that OPEC is a hang over from the 20th century which has lost its purpose, and in its current format and operation has no place in a 21st Century multi polar economy.

"I expect nothing new from OPEC meeting in December, with the exception that perhaps that OPEC might cease to exist all together. This would be a good result," Barden told Trend.

The volatility in oil prices over the last few years has come from the financial markets, through Brent Futures, not from production adjustments of OPEC, Barden believes.

"It is clear, and has been for some time, that OPEC has little or no control over global oil prices. Production has remained steady for oil globally, and the notion that member countries can just turn the oil tap on or off like water is completely ridiculous," he said.

"OPEC should be transformed into a collaborative technology sharing platform, which includes consumers and producers together to drive carbon fuel savings, rather than like some sort of adolescent school yard gang who tries to steal each others lunch boxes in the form of oil market share," Barden added.

OPEC last met this summer in Vienna, when it agreed to leave its production ceiling unchanged at 30 million barrels per day. Saudi Arabia and other Gulf states pushed OPEC's strategy shift last year to defend market share rather than cut output to support oil prices.

Amid the existing opinion that OPEC has lost its relevance, the cartel is going to welcome its new member Indonesia in December.

OPEC is likely to increase its official production ceiling with Indonesia's expected return to the producer, media report said reffering to OPEC delegates.

An increase in the production target in order to make room for the return of Indonesia will be seen as a pure technical move with no market impact, according to Ole Hansen, Head of Commodity Strategy in Danish Saxo Bank.

"What the oil market will be trying to assess is how deep the discontent currently is within OPEC. We have just seen that the cartels long-term oil strategy which should have been presented at the December meeting being postponed until 2016," he told Trend.

He said the governors disagreed on clauses suggested by some members, including about curtailing output, setting production quotas and finding ways to maximize OPEC profit.

While individual members of OPEC, both rich and poor, are suffering from current low prices, Hansen believes, the lack of signs that non-OPEC production is slowing will make it a very tough decision to change the current course.

"The OPEC basket price has fallen below $40 for the first time since 2009 and this development will undoubtedly add some additional pressure from individual members. I think they will only cut production when they see clear signs of a non-OPEC slowdown and this will probably not be seen before Q1," Hansen said.

At the same time Hansen said he sees no cooperation between OPEC and non-OPEC countries - its every man for himself at the moment with those producers having the possibility of raising production to protect revenues doing just that.

Not least Russia who is producing at a post-Soviet record, according to Hansen.

"Russia's output has steadily climbed through the year reflecting a vicious battle for market share, which has seen global producers ramp up production. The increase in supply has come despite a precipitous slide in the oil price from the plus $100 a barrel mark in the summer of 2014 to just above $40 a barrel today," he said.

---

Follow the author on Twitter: @AygunBadalova

Development Bank of Kazakhstan looking to expand co-op with Turkish businessmen
Development Bank of Kazakhstan looking to expand co-op with Turkish businessmen
Main reasons for drop in Kazakhstan's foreign reserves unveiled
Main reasons for drop in Kazakhstan's foreign reserves unveiled
Kazakhstan acquainted with global trends in attracting investments
Kazakhstan acquainted with global trends in attracting investments
Loading Bars
Latest
Bahar Azadi gold coin price continues to fall in Iran
Iran unveils data of gasoline and petrochemicals exports
New transmission line to provide opportunities for both Georgia’s and EU energy network - expert
Weekly review of key events in Azerbaijan's transport sector
China fines Alibaba record $2.75 billion for anti-monopoly violations
Italy reports 344 coronavirus deaths on Saturday, 17,567 new cases
Azercell’s “Kabinetim” mobile app exceeded 1 million downloads
Pakistani FM to visit Tehran
Funeral for UK's Prince Philip to be held on April 17
Pinterest becomes latest platform to appoint Turkey representative
Italy's economy seen growing 4.1% this year
Volume of cargo loaded, unloaded in Iran’s Bandar Lengeh port announced
Turkmenistan’s growth of trade turnover in 1Q2021 announced
Turkish electrical goods' 1Q2021 export to Uzbekistan spikes
Azerbaijani president's assistant talks Turkic Council media co-op's systematization
Hungary considers Turkic Council member states important partners
Iran's Energy Exchange announces products to be on sale on April 11
Uzbekistan ready to actively partake in restoring Azerbaijan's liberated territories
Azerbaijan confirms 2,192 more COVID-19 cases, 1,554 recoveries
Turkey did its best in media coverage of Azerbaijan's Patriotic war - presidential administration
Azerbaijani president's assistant meets with Turkic Council's secretary-general
Briefing of Turkic Council's high-ranking media officials held in Baku (VIDEO)
Anti-Turkic campaigns periodically carried out - Azerbaijani president's assistant
Azerbaijan's victory in Second Karabakh War is victory for entire Turkic world - top official
Azerbaijan working to develop ties between Turkic states - president's assistant
Turkic Council developing roadmap for better co-op with Turkic-speaking countries
Turkic-speaking countries to continue to support Azerbaijan - Turkic Council
Armenia's refusal to provide maps of mines on Azerbaijan's lands is concerning - ambassador
Turkic Council's meeting held in Baku (PHOTO)
Iran reveals COVID-19 data for April 10
Kazakh, Uzbek PMs launch construction of new 'Central Asia' int'l co-op center
Turkish Ambassador: I've never separated Azerbaijan and Turkey, both are homeland to me
Buta Airways to Start Operating Flights to Zhukovsky Airport
Turkey's support for Azerbaijan in Karabakh war will always be in our memory - President Aliyev
Azerbaijan's MoD organizes visit for foreign military attaches to Air Force military unit
Turkish-Azerbaijani fraternal relations are at highest level today - President Aliyev
Iran's exports via Jolfa border checkpoint increase
Georgia reports 506 new coronavirus cases for April 10
SOCAR's capex to moderate due to SGC, STAR refinery’s commissioning
Certain licenses issued to setting up enterprises in Iran's Markazi Province
Turkey unveils 2M2021 data on freight, passenger traffic through Ankara Esenboga Airport
Azerbaijani oil prices up
Fitch Affirms SOCAR at 'BB+'
Turkmenistan's state budget revenues surpass initial forecast
Georgian TBC Leasing's secured debt rating equalizes with its Long-Term IDR
Azerbaijani president awards former Turkish ambassador with 'Dostlug' order
President Ilham Aliyev receives Turkish Ambassador to Azerbaijan Erkan Ozoral (PHOTO)
Turkmenistan's GDP grows in 1Q2021
Weekly review of Azerbaijani currency market
Iranian currency rates for April 10
Azerbaijan has favorable investment climate - Turkish MUSIAD
Azerbaijani Mine Action Agency continues to clear Gubadly, Zangilan, Jabrayil from mines
India reports a record 145,384 COVID-19 infections
Armenia set up booby traps on Azerbaijan's de-occupied lands - Mine Action Agency
Azerbaijan's rhythmic gymnasts 2-nd in online tournament organized by Finnish Gymnastics Federation
Azerbaijani gymnastics team captures silver in Egypt (PHOTO)
China's top market regulator imposes penalty on Alibaba Group over monopoly conduct
Iran's Isfahan producing 2,100 tons of medicinal herbs
Japanese entrepreneurs intend to increase imports of Kyrgyz honey
Austrian companies eye contribution to Georgian ports' expansion - ministry
Turkey reports 55,791 new COVID-19 cases
Germany to amend law for nationwide COVID-19 response
World Bank says Azerbaijan's consumer market to grow till 2023
Janssen's COVID-19 vaccine under EU review over blood clots
Number of COVID-2019 cases across globe up by over 718,000 in past day, says WHO
Poland's COVID-19 cases top 2.5 mln
Georgian-Lithuanian co-op facilitates freight transport between China, Europe - Ministry
US accelerator to provide Azerbaijani startup project with big investments
Eurowings to start flights from Dusseldorf to Georgia
NASA's Mars helicopter to attempt first flight
Health Minister hails vaccination in driving down COVID-19 severity in Turkey
Saudi-led coalition intercepts bomb-laden drone towards border city
Azerbaijani president expresses condolences to PM of UK
UN interested in intensifying ties with Azerbaijan - President of General Assembly
Azerbaijani FM, Sec-Gen of Turkic Council discuss issues of mutual interest (PHOTO)
"Georgia Capital" investment company to sell part of its business
Iran's only option on negotiation table - US lifting sanction - Iran’s ambassador to IAEA
Turkmen Helath Ministry opens tender for purchase of medical supplies
South Korean PM to visit Iran for Seoul-Tehran Cooperation
Speaker of Azerbaijani parliament meets with president of 75th session of UN General Assembly (PHOTO)
Azerbaijani president expresses condolences to Queen Elizabeth II
Azerbaijan clearing territory for new settlement of mines in Zangilan district
Azerbaijan aims developing use of wind energy
Russian, Turkish presidents call for restoration of transport infrastructure of South Caucasus
Azerbaijan actively participates in implementation of int’l projects within BTK and North-South corridors
State Oil Company of Azerbaijan digitizes information on oil and gas wells in corporate database
Azerbaijani, Turkish armies Joint Operational-Tactical Exercises end (PHOTO/VIDEO)
International Bank of Azerbaijan opens tender to buy network equipment
Russia always ready for settlement option supported by sides of Karabakh conflict - Foreign Ministry
State Oil Company of Azerbaijan hosts opening ceremony of Visualization Center (PHOTO)
Embassy of India organizes Interactive Webinar to promote Indian spices (PHOTO)
Bank Melli Iran’s branch in Azerbaijan completes Q1 2021 with profit
Uzbekistan receives status of GSP+ system's beneficiary
Turkmenistan's Turkmenhimiya SC opens tender for ammonium nitrate purchase
Turkish business’s interest in Azerbaijan’s Khachmaz district growing (PHOTO)
Azerbaijani defense minister meets with Turkish ambassador
Mine Terror: Armenia's terrifying deceit – Trend’s video project
Georgia and Israel agree on legal employment
President of VimpelCom points out necessity to observe balance between security and privacy on Internet
Latvia looks to promote further cooperation with Azerbaijan in education
All news