Possible Russia-OPEC talks unlikely to be fruitful

Business Materials 2 February 2016 20:58 (UTC +04:00)

Baku, Azerbaijan, Feb. 2

By Umid Niayesh - Trend:

While talks between Russia and OPEC may be possible, they are unlikely to be fruitful, Gal Luft, co-director of the Institute for the Analysis of Global Security (IAGS), told Trend Feb. 2.

The Saudi-Russian relations are at a low due to Moscow's siding with the Syrian-Iranian axis, Luft said, adding this creates a context that is not conducive to cooperation on oil quota coordination.

"If the Saudis decided to act to reduce production they would act alone or in conjunction with other OPEC members - not with Russia," the expert said.

The cartel's delegates said last week that a gathering of oil officials of OPEC and non-OPEC countries could take place in February or March, perhaps at an expert level, rather than the ministerial one.

"It is all in the hands of the Russians now," an OPEC delegate was earlier reported to say.

Meanwhile, Russian Foreign Minister Sergei Lavrov said Feb. 2 that his country will join the OPEC meeting with non-member states if it takes place.

"If there is common interest in a meeting between OPEC members and countries that are not part of the organization, we, of course, will be ready for such a consensus. We are willing to work in the formats agreed by all parties concerned," Lavrov said.

Market prices for benchmark Brent and WTI crude dropped to a 12-year low in mid-January, sliding below the level of $30 a barrel due to oversupply.

Further speaking to Trend, Luft commented on Iran's stance on the issue, saying Tehran would welcome any action that drives up prices, but it isn't likely to accept production cuts on the ground that its production has already been suppressed for too long under international sanctions.

Iran is preparing to add 500,000 barrels per day of crude to production level this year, following the removal of international sanctions against it last month.

The latest OPEC monthly report, released Jan. 18, indicates that the cartel decreased oil production by 210,000 barrels per day in December, month-to-month to 32.182 million barrels per day (mbpd).

In 2016, the demand for OPEC crude is forecasted at 31.6 mbpd, some 1.7 mbpd higher than the previous year.

OPEC will hold an ordinary meeting June 2.


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