OPEC needs to find compromises both for Iraq and Iran
Baku, Azerbaijan, Oct.31
By Leman Zeynalova – Trend:
OPEC needs to find compromises in oil output both for Iraq and Iran, Charles Ellinas, oil market expert, executive president at Cyprus National Hydrocarbons Company (CNHC) told Trend Oct.31.
“It looks challenging, but still possible,” he added. “Iraq may be given a higher production limit as a compromise.”
Iraq, OPEC's second-biggest producer, earlier said that it would not cut output and should be exempted from any curbs, as it needs funds to fight the “Islamic State” (IS, aka ISIL, ISIS or Daesh) terrorist group.
There have to be agreed limits which are auditable, said Ellinas, adding that in the end, if a country does not stick to its production limit, it will be difficult to enforce it.
“However, I believe most OPEC countries want this to work, because their economies have been hit badly. So they will adhere to any agreed deal,” he added.
The expert believes that both Russia and OPEC, especially Saudi Arabia, want price stability above $50 per barrel.
“In the end, they will find a formula. It may just be a production freeze at some level. If they do not, it could bring prices down again, which could hurt both. There is still too much oil in the market,” said Ellinas.
As for the involvement of the US in OPEC discussions, he said that it is not realistic to expect this country to participate.
“There are 4,000 independent oil and gas companies in the US and there is no way they can be 'instructed' on production or price. It's all commercially driven,” added the expert.
In September, OPEC producers agreed during the informal meeting in Algiers to cut down the oil output to 32.5 million barrels per day (bpd) from current production of 33.24 million bpd.
How much each country will produce is to be decided at the next formal meeting of OPEC in November.