OPEC interests: market share over low price losses

OPEC interests: market share over low price losses

Baku, Azerbaijan, Dec. 5

By Aygun Badalova - Trend:

The OPEC (Organization of the Petroleum Exporting Countries) meeting in Vienna Dec.4 was another memorable event in the history of the cartel.

The decision of the OPEC adopted last year was called historic because, despite all the expectations and hopes for the assistance of the cartel to stabilize the falling oil prices, it didn't reduce the level of its production, thus showing that the market share for some member states is more important than the losses from low prices.

At this time, no surprises from the meeting were expected - it was obvious that the cartel members weren't going to change their strategy, that is, to save the oil prices. However, there was confidence that the oil production quota will officially rise in view of the accession of the new participant, Indonesia, to the organization.

But, nevertheless, the meeting wasn't held without surprises. Following the meeting it was announced that in fact, the OPEC left oil production quotas unchanged. Why? The cartel has refused from an accurate assessment of its target oil production - no figures were disclosed in the communiqué issued after the meeting of the cartel. This was due to uncertainty with further oil production volumes in Iran.

There are two ways to explain the OPEC decision at the meeting Dec.4. Members of the cartel faced serious disagreements and couldn't come to a common agreement regarding the quota. After all, there are serious victims of the policy carried out by the OPEC in the ranks of the cartel, in particular, Venezuela, which recently launched a number of initiatives on measures to stabilize oil prices.

Another option could be the OPEC's attempts to shirk responsibility for what is happening in the oil market. After all, any slightest increase of the official quota, be it even a decision of a technical character on the background of the new member's accession to the organization, will lead to a further decline in the oil prices.

OPEC has previously called on non-OPEC countries to reduce the oil production, thereby showing reluctance to take certain measures by itself. Moreover, OPEC is confident that the oil prices will anyway stabilize without its interference.

Additionally, by verbally keeping the target level of oil production unchanged, OPEC didn't specify the official figure, thereby trying to justify its failure to comply with the quota set by the organization itself.

OPEC's production ceiling was set at 30 million barrels per day in 2011. However, as is known, in fact the countries produce a total of nearly 31.5 million barrels per day.

OPEC, founded over 50 years ago to maintain effective oil prices, today, in fact serves as a stand-alone business enterprise with its own interests, putting great pressure on the market.

This week, Saudi Arabia once again proposed the non-OPEC countries to cooperate on stabilizing the market. Saudi Arabia's Oil Minister Ali bin Ibrahim Al-Naimi said that his country is ready to work with anyone who will help balance the market.

An important question arises: where will this cooperation reflect itself when Saudi Arabia doesn't plan to reduce the production and proposes someone else to do that for the good of the market?

Currently, many analysts are confident that OPEC's inaction increases the risks for further decline in oil prices.

Given that OPEC continues to pursue its oil production policy and that there are weak prospects for restoring the demand and supply balance, the oil prices are likely to drop in Q1 2016, according to the expectations of the US JP Morgan bank.

The bank analysts forecast that the average price for Brent oil will be $48 per barrel, while the WTI oil - $45 per barrel in Q1 2016.


Aygun Badalova is Trend Agency's staff journalist, follow her on Twitter: @AygunBadalova

Weekly actual topics in Azerbaijan (April 16-20)
Weekly actual topics in Azerbaijan (April 16-20)
Weekly tenders in the region (April 16-20)
Weekly tenders in the region (April 16-20)
Last week’s laws, orders and decrees in Azerbaijan (April 16-20)
Last week’s laws, orders and decrees in Azerbaijan (April 16-20)
Loading Bars
Ministry talks social benefits paid out to population in Azerbaijan since early 2021
GDP per capita increases in Azerbaijan
Azerbaijan discloses amount of trade surplus for 1Q2021
Azerbaijan creating industrial clusters to develop metallurgical industry
Facilities to be put into operation at Iran's Ilam Airport
Fitch Ratings shares forecast for Azerbaijan's 2021-2022 external public debt
Baku Higher Oil School hosts webinar ‘Women in Engineering: Challenges and Opportunities’ (PHOTO)
Batumi International Airport of Georgia receives first passenger flight after reconstruction
Azerbaijan's Azerishig to purchase metal structures
Russia reports 8,554 COVID-19 cases over the past day
New type power units at Uzbekistan’s Turakurgan TPP to increase electricity production
UAE airlines Etihad, flydubai cancel Tel Aviv flights
Kazakhstan's int'l reserves grow
Georgia introduces new requirements for registration of trucks, buses, and minibusses
Third oil loading berth for Turkmenistan’s Turkmenbashi oil refinery under construction
Monument to famous Azerbaijani singer to be soon installed in Baku (Exclusive) (PHOTO)
Value of coupon payments to investors in Azerbaijan soars - National Depositary Center
Uzbekistan reveals companies interested in construction of solar power plant in Surkhandarya region
Carbon neutrality in 2045 requires managing increasing quantities of decarbonized biogas
UK to make final lockdown easing decision on June 14
French company eyes to co-op with Uzbekistan in using new technologies in agriculture
Bollywood: Big B buys oxygen concentrators, donates ventilators
Germany to finance implementation of projects in Uzbekistan in several areas
Direct delivery of Uzbek export goods to Pakistan implemented through Afghanistan
Uzbekistan, Tajikistan eye increasing trade turnover
Airport in Uzbekistan opens tender for supply of towbar
Cargo movements in Iran’s Chabahar port down
Uzbek finance ministry becomes sole shareholder of Uzbekistan Railways
Uzbekistan eyes attracting Japanese companies for joint production of branded footwear
Airport in Uzbekistan to buy spares for vehicles via tender
Azerbaijan enhancing information security of banks
Weekly review of Turkmenistan’s exchange
Iran’s CBI discloses amount of currency sold at NIMA exchange rate
One of violators of Azerbaijan's state border arrested - Prosecutor General’s Office
Munitions found in Azerbaijan's Khojavand district
Tesla crash victim lauded 'full self-driving' in videos on Tiktok
Central Bank of Azerbaijan unveils volume of lending to government agencies
Azerbaijan sees increase in gold price
Azerbaijani cotton processing plant undergoing reconstruction
ACG oil transshipment from Ceyhan terminal exceeds 75 mb YTD
Azerbaijan demonstrates high growth rates in mobile infrastructure dev't - GSMA Association
Second Sputnik V shipment delivered in India
Israeli, Palestinian delegates to attend UN Security Council’s meeting on May 16
Kazakhstan increases imports of Switzerland-made goods
Georgian Nadi Group Ltd snail farm increases production
Georgia researching manufacturing of airplane parts and repair services
Georgian Dzuguri company to resume production of mineral water
Austria's 4M2021 import value of Turkish grains grows
Azerbaijan boosts import of Turkish-made chemicals
Uzbekistan, Dominica establish diplomatic relations
Turkey sees increase in exports of electrical goods to Georgia
Azerbaijani currency rates for May 16
U.S. fuel crisis eases as pipeline returns to normal after hack
Turkey sees increase in clothes exports to Germany
Iran to pass new water law bill
Uzbekistan reveals COVID-19 data for May 16
Iran to revive thousands of stagnant industrial units
Walmart to buy Israeli virtual fitting room co Zeekit
Azerbaijani Armed Forces begin training exercises
Iran increases wheat purchase guarantee rate
Volume of loans issued to Azerbaijan's public organizations decrease
Iran-Switzerland trade depends on JCPOA talks- official
Razi Co. among top three Iranian insurance companies - CEO
OPEN NET internet project to continue in Georgia - PM
It is Armenia that violates internationally recognized borders of Azerbaijan - MFA
Azerbaijan's 4M2021 inflation rate disclosed
Britain to treble tree planting by 2024 to fight climate change
Switzerland sees potential in strengthening co-op with Azerbaijan in energy field
Argentina's COVID-19 death toll exceeds 70,000
Israel hits Hamas politburo leader’s house in Gaza
Turkey registers 11,472 new COVID-19 cases
SpaceX launches rocket with 54 satellites
Brazil reports 2,087 more COVID-19 deaths
France hits target of 20 mln first COVID-19 vaccinations: PM
Air raid sirens go off, explosions heard in Tel Aviv
9 missing in Indonesia's boat accident
IS claims responsibility for Kabul mosque attack
More than 677,000 COVID-19 infections detected worldwide over past 24 hours
Chamber of Commerce hopes Iran's trade to improve as COVID-19 spread declines
Iran to hold conference on electrical engineering
Weekly review of Azerbaijani oil market
Uzbekistan to restore air communication with Saudi Arabia
Georgian Parliament Speaker to pay official visit to Brussels
Britain reports 2,027 new COVID-19 cases, seven deaths
Emergency session of OIC to be held on May 16 at Turkey’s initiative, Ankara says
Turkey aims to create electric vehicle market
Uzbekistan imported more than 200 million liters of gasoline in Jan-Apr 2021
Iranian, Spanish FMs exchange views on economic, trade coop.
Kazakh, Polish, Ukrainian and Arabian airlines to resume flights to Batumi
All international airlines halt air service with Israel
IDF confirms its strike on Gaza building after advance warning to civilians
Azerbaijani and Tajik FMs discuss situation on Azerbaijani-Armenian border
Fitch Ratings forecasts inflation rate in Azerbaijan for 2021-22
Nordwind launches direct flights from St. Petersburg to Baku from May 18
US ambassador to Azerbaijan, USAID director meet with Azerbaijani MP
Shooting occurred on border with Iran, two Azerbaijani border guards were killed
Suez Canal starts dredging work to extend double lane
At least 2,300 missiles fired at Israel from Gaza Strip since May 10
Africa's COVID-19 cases pass 4.67 mln: Africa CDC
Turkish Airlines resumes flights to Azerbaijan's Ganja (PHOTO)
All news