OPEC deal could be extended if market not rebalanced by year-end

OPEC deal could be extended if market not rebalanced by year-end

Baku, Azerbaijan, May 22

Trend:

The OPEC deal on oil production cuts may be extended beyond 2018 if the participating countries consider that the market has not yet been rebalanced, Head of Economic Research at Sogefi Group and expert in energy policy Luis Colasante said in an interview with Azernews.

He was commenting on whether the Organization of the Petroleum Exporting Countries (OPEC) chooses to continue with the same strategy fixed at the end of 2016 following the expiration of the current agreement.

"OPEC is not feeling pressure to start winding down the production cuts despite oil prices continue their strong rally with a crude oil price of Brent above $80 a barrel," he said.

OPEC sees the price spike as a short-term change driven by geopolitical concerns rather than the fundamentals of a much tighter oil market, according to the expert.

The geopolitics has taken over the oil market, pushing crude oil prices up to three-year highs, he noted.

"The market price will continue to increase if Venezuela production continues to collapse. In two years the country’s production decreased from 2.4 to 1.4 million barrels per day, due to poor management of Venezuela's state oil company PDVSA combined with U.S sanctions and legal actions from some oil and gas companies as ConocoPhillips which presses forward on recouping $2 billion from Venezuela," Colasante added.

The expert’s forecast for Venezuelan production is 1 - 1.2 million barrels per day at the end of 2018 and 900,000 - for 2019.

"With this scenario, the OPEC members will not have to make a significant effort to cut production, because due to production loss in Venezuela and Iran, after U.S. President Donald Trump pulled out of the global nuclear accord with the country last week, the crude oil price will continue to increase, perhaps, hitting the $90 a barrel in the coming months," he said.

All OPEC members are satisfied with the benefits of higher crude prices, according to the expert.

"In my updated forecast, I calculated that Iran could decrease its production to 560,000 – 700,000 barrels per day at the end of 2018. Iranian government was asking Chinese oil traders to maintain imports after U.S. sanctions," he added.

Until today Saudi Arabia, Russia, and the United Arab Emirates haven’t increased their production in response to Venezuela’s collapsing output, because they prefer crude oil prices to be kept at a high level, Colasante noted.

In addition, Saudi Arabia, OPEC’s largest oil producer, will continue to push the oil prices to a level of $90-100 a barrel, according to the expert.

He named two reasons for that: first, the country wants to increase the value of a possible IPO and, secondly, to balance its budget.

Currently, Saudi Arabia is looking to raise $100 billion either later this year or in early 2019 by selling 5 percent of the state energy giant, Saudi Aramco, which is believed to be worth $2 trillion.

OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.

Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1, 2017.

OPEC and its partners decided to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.

Meanwhile, the prices for "black gold" hit $80 a barrel on Thursday, May 17, for the first time since November 2014 on concerns Iranian exports could fall, reducing supply in an already tightening market.

On May 18, the price of a barrel of Azeri Light crude oil increased by $2.21 to stand at $81.03.

The prospects of a sharp drop in Iranian oil exports in the coming months due to renewed U.S. sanctions following President Donald Trump’s decision to withdraw from an international nuclear deal with Tehran has lifted oil prices in recent weeks.

---

Director General: Central Bank to meet Iran's trade needs
Director General: Central Bank to meet Iran's trade needs
Iran’s Guardian Council discloses number of complaints during parliamentary elections
Iran’s Guardian Council discloses number of complaints during parliamentary elections
Production of some industrial products down in Iran
Production of some industrial products down in Iran
Loading Bars
Latest
Khyber Pakhtunkhwa Provincial Assembly of Pakistan adopts resolution on reaffirming respect to territorial integrity of Azerbaijan
EU-wide Karabakh rally held in Berlin
Facial recognition company Clearview AI probed by Canada privacy agencies
Azerbaijani CEC annuls voting results of one more polling station
Azerbaijani CEC upholds district election commission’s decision on 30th Surakhani constituency
Azerbaijani CEC annuls voting results of one more polling station
Director General: Central Bank to meet Iran's trade needs
Azerbaijani CEC annuls voting results of one poling station in Yevlakh constituency
Azerbaijan’s President Ilham Aliyev, First Lady Mehriban Aliyeva meet with Vatican Secretary of State Cardinal (Photo)
Azerbaijan’s President Ilham Aliyev, First Lady Mehriban Aliyeva meet with Pope Francis in Vatican (PHOTO)
Political analyst: Signing of Joint Declaration by Azerbaijan with G7 member Italy is extremely important
Iran’s Guardian Council discloses number of complaints during parliamentary elections
Meeting on parliamentary election results kicks off in Azerbaijani CEC
Production of some industrial products down in Iran
Production of some chemicals and petrochemicals up in Iran
Iran’s Shazand Oil Refining Company opens tender to buy equipment
EU-wide Karabakh rally to be broadcast live (PHOTO)
Production of mining materials up in Iran
Azerbaijan’s PMD Group continues construction of residential complex in Sumgayit
WHO concerned about coronavirus cases with no clear link
Azerbaijan's dairy products become more popular abroad
Kazakhstan prohibits tours to coronavirus-exposed countries
Uzbekistan boosts production of light vehicles
Central Bank's short-term notes put up on Baku Stock Exchange
Kazakhstan’s oil producing company announces tender to buy UPS
Italy to support protection and promotion of Azerbaijani historical monuments
Small enterprise to open in Azerbaijani district
Kazakhstan’s oil producing Karazhanbasmunai company to buy fuel via tender
SOCAR discloses payments to state fund
Turkmengas State Concern opens tender for equipment inspection
Iranian currency rates for Feb. 22
Turkey increases exports of citrus fruit to Georgia
ERIELL continues development of new wells in Uzbekistan
Turkey increases export of petroleum and petroleum oils to Georgia
Malaysia says American coronavirus case now tests negative for virus
Georgia cuts knitwear exports to Turkey
Georgia increases export of flours, meals and pellets to Turkey
Kazakh oil extracting company Ozenmunaygaz opens tender to rent equipment
Weekly review of Azerbaijan's precious metals market
Weekly review of Azerbaijani currency market
Uzbekistan holds talks with Egypt's El Sewedy Electric
Azerbaijan is not only of strategic importance to Italy, but whole EU: Dutch expert
US sends protective equipment to Uzbekistan amid coronavirus spread
Iran announces parliamentary election results in more constituencies
Over 6,000 kilometers of roads laid in Azerbaijan within five years
Georgia increases export of ferro-alloys to Turkey
Armenia violates ceasefire with Azerbaijan 23 times on Feb.21- Feb.22
Epsilon expanding gas transmission infrastructure in Uzbekistan
Baku to host Fintech Summit 2020 exhibition on financial technologies
Even if JCPOA eliminated, Iran-Turkey trade to remain consistent - Chamber of Commerce
Turkmenistan discloses funds allocated for construction of new regional center
President Ilham Aliyev viewed building designed to host Azerbaijan Culture Center in Rome (PHOTO)
Next generation pilots in Azerbaijan to be trained on Italian M-346s
Japan confirms four more virus cases, to close a school for two days
Iran's stock market trade grows
Cost of Kazakh, Kyrgyz border checkpoints modernization revealed
President Ilham Aliyev met with mayor of Rome (PHOTO)
Iran's 11th parliamentary election results for 23 constituencies announced
Georgia notes benefits of Southern Gas Corridor for country
Turkey reveals data on its chemical products export to Iran
Death toll of flash flood rises to 7 in Indonesia
London police charges man over stabbing attack at mosque
Wuhan virus to more severely affect oil market with prolonged containment
S. Korea reports 142 more cases of novel coronavirus, total soars to 346
Macron says France, Germany call for ceasefire in Syria’s Idlib
Sanders blasts Russia for reportedly trying to boost his presidential campaign
China reports 397 new confirmed cases of coronavirus on mainland on Feb.21
British passengers from virus-hit cruise ship due to arrive home
First patient dies from coronavirus in Italy
Qatar Airways freighters depart for China with coronavirus medical relief
UAE records two new coronavirus cases, total number reaches 11
No decision in US on possible deployment of Patriot systems in Turkey
Zarif, UN chief discuss Afghanistan's latest developments on phone
WHO officials say coronavirus outbreak in Iran is ‘very worrisome’
Swiss UBS revises oil price forecast amid coronavirus
Hong Kong to allocate 3.85 bln USD for fight against epidemic
Uniper sells important component of Central Germany's energy supply
Integrated subsea contracts reach record high in 2019
Companies interested in acquiring Greek DEPA revealed
Oil prices to fall sharply if OPEC leaves quotas unchanged
TAP to shape Italy’s gas market in several ways: WoodMac
5.1-magnitude earthquake strikes Xinjiang
Erdogan, Putin reiterate commitment to all agreements on Syria's Idlib
Enagas: TAP will facilitate Europe’s energy transition
Digital technology department to be created in Turkmen ministry
Turkish Armed Forces won’t leave Syria’s Idlib district - Erdogan
Baku’s foreign policy aims to strengthen Azerbaijan’s position in Europe - analyst
Georgian Tbilisi recognized as one of best of European Cities of the Future
Turkmenistan discusses regulation of labour relations with ILO
Azerbaijan discloses procedure as part of compulsory medical insurance
Official seeing-off ceremony held for President Ilham Aliyev in Rome (PHOTO)
Georgia's trade turnover with Israel declines
Subsidiary of KazMunayGas signs agreement for specialized equipment supply
Giulietto Chiesa: Azerbaijani president’s visit to Italy - landmark event for Baku, Rome
Global watchdog places Iran on terrorism financing blacklist
Azerbaijan’s security service spreads info over special operation in Neftchala district (VIDEO)
Funds for agriculture dev't to be allocated in Kazakhstan
Azerbaijan to increase export of packaging materials
Italy invariably supports Azerbaijan’s territorial integrity - MP
Several people detained due to voting violations in Iran's parliamentary elections
All news