OPEC says it, non-OPEC producers in right track to cut oil production (25 February 2017 12:46)
International Energy Agency: The first cut is the deepest (10 February 2017 18:46)
OPEC oil production fell by 1mln barrels per day in January (10 February 2017 16:46)
Date: 3 December 2015 12:27
Baku, Azerbaijan, Dec.3
By Elena Kosolapova – Trend:
OPEC will not cut the output production target at the next meeting on Dec. 4 because the goal to defend its market share has not been reached yet, Director of Center for Energy in French Institute of international Relations (IFRI) Marie-Claire Aoun believes.
In an interview with Trend, Aoun said that Saudi Arabia who has the most important production capacity among OPEC members, decided since November 2014 to adopt a strategy aiming at excluding the high-cost production units, most importantly the light tight oils.
The expert said that this strategy is paying off only now, because the US oil production appeared to be much more resilient than initially expected, thanks to significant productivity gains.
“It is estimated that the decline in the US oil production will reach 1 million barrels per day in July 2016. Considering these elements, at least for a few months, Saudi Arabia will probably maintain this “do-nothing” (not cutting production quotas) strategy in order to preserve its market share,” Aoun said.
Meanwhile she noted that not all the OPEC members are satisfied with the strategy and low oil practice as a result.
“On one hand, the rich GCC (Gulf Cooperation Council) countries, led by Saudi Arabia can afford for some time not to cut the production, because of their huge financial reserves, thanks notably to their sovereign wealth funds. On the other hand, some OPEC members, benefiting from a more limited oil reserves per capita have immediate needs, and cannot afford these low prices for the long term. Countries such as Iran, Venezuela, Algeria, Nigeria and Angola are severely affected by the current low oil prices,” she said.
Aoun does not expect that in short term, the fundamentals of the market will change. She noted that although the non-OPEC production is expected to decrease slightly, the oil market is still characterized by an oversupply situation, coming also from OPEC members. Furthermore, crude oil stocks are still at record levels.
“Given these elements, in short term, oil prices will probably fluctuate around the current levels, especially that in the next few years, countries like Iran or Iraq will increase further their production,” she said.
Meanwhile she noted that a number of factors can trigger a new evolution in oil prices.
“The oil prices equation depend of several elements, such as the economic situation in Asia (China, India, the US, Europe), technological progress, the current debates on climate change and the COP21, geopolitical situation in the Middle East… All these factors can somehow influence the oil prices,” she said.
On Dec. 2 futures for Brent oil fell below 43 dollars per barrel at the London trading floor, approaching the minimum level of the last six years.
Edited by SI.
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