Posted on 04/10/2015 10:11:49 AM PDT by thackney
OPEC's strategy of holding output steady is not working and the group's members should discuss production levels before its next meeting in June, Iran's oil minister said, a sign of the pain lower prices are causing OPEC's less wealthy producers.
However, Bijan Zanganeh also told Reuters it was up to other members of the Organization of the Petroleum Exporting Countries (OPEC) to make way for any extra Iranian crude that reaches world markets if Western sanctions on Tehran are lifted.
Oil prices have halved from the $115-a-barrel level hit last June, in a drop that deepened after OPEC refused to cut output, choosing instead to defend market share. Top exporter Saudi Arabia was the driving force behind the policy shift.
"It seems (OPEC's strategy of not cutting output) does not work well, because prices are coming down," Zanganeh told Reuters on Thursday during a visit to Beijing. "We haven't witnessed stable situations on the market."
Iran was among the OPEC members that wanted an output cut at OPEC's last meeting, in November. But the Gulf OPEC members, who account for more than half of the group's output, refused to cut without the participation of non-OPEC producers....
OPEC, which pumps one third of the world's oil, may soon have to deal with an increase in supply from Iran if Western sanctions over its nuclear programme are lifted.
The group will be able to "coordinate itself" to accommodate Iran's return without causing a price crash, said Zanganeh, who was making his first visit to Beijing since taking on his current role two years ago.
(Excerpt) Read more at rigzone.com ...
OPEC should change course, cut oil output: Libya official
http://english.alarabiya.net/en/business/energy/2015/04/08/OPEC-should-change-course-cut-oil-output-Libya-official.html
OPEC should change course and cut oil supply by 800,000 barrels per day (bpd) or more to prevent an expected return of Iranian exports from weighing on prices, Libya’s OPEC governor said.
The comments underline how the halving of oil prices from $115 a barrel in June on global oversupply is hurting OPEC’s less wealthy members outside the Gulf and suggests the 12-nation group remains divided over the impact of its 2014 policy shift to defend market share, not prices.
“OPEC members, as a unit, need to re-evaluate their strategies,” Samir Kamal, Libya’s OPEC governor and head of planning at the North African country’s oil ministry, told Reuters by email.
They “need to reach an agreement to bring down the production levels by at least 800,000 barrels a day, especially now that an agreement has been reached with Iran which is expected to increase its production,” he said.
more at link
On a related note, how ‘bout those SUV sales?
http://www.star-telegram.com/news/local/community/arlington/article17878235.html
As long as 800K bbl OPEC cuts = 800K bbl Saudi cuts, the Saudis may balk. At the same time, it does not seem economically rational for the Saudis not to cut. Cost-wise, they have the cheap oil. Profits at $80 with an 800K Saudi production cut will exceed profits at $50 without a cut. Why not enjoy the high prices merely by pumping less? This is presumably why Harold Hamm has doubled down. It’s not economically rational for the Saudis to pursue their current course of action.
I predict the same results as the request to cut last fall. Saudi is not going to cut their market share to provide more funds to other countries.
They are investing significantly in future capacity now, while several other OPEC nations are just spending on government programs.
Saudi’s seem to take the longer term view.
Great story in the last few days about Saudi Arabia having to go in to the borrowing market this year as their revenue’s have fallen so.
ahhhh, to bad.
Saudi went into this price drop with ~$800 Billion in cash reserves.
Add low oil prices to sanctions and we could ruin Iran’s leadership. Obama knows it. That’s why he’s trying to rescue them.
Already Obama Big Britches commentary from Tehran I see.............
“It seems (OPEC’s strategy of not cutting output) does not work well, because prices are coming down,”
Well, that is the purpose of the (Saudi) strategy, nitwit.
Iran tells OPEC they need to cut production to raise price.
Iran also states that they plan to put more oil on the market.
We’ll see how that works out.
As if Saudi was in any mood to help Iran economically given they are fighting an undeclared war against each other.
Doesn’t work? That depends on what the goal is. Maximizing strategic profit in the ME might just be the goal rather than financial profit.
sooo,
A little less than Apple?
The survival of the Kingdom and the discomfiture of Russia and Iran promise longer term profit than the dollars that could be gained next week by reducing production.
“Profits at $80 with an 800K Saudi production cut will exceed profits at $50 without a cut. “
But there’s so much excess capacity a Saudi cut would just be made up at about the same price by others: the price would not go up and the Saudis would come out behind.
Until other producers cut back capacity- or demand rises- there’s no benefit in a cut.
And a lot more than any other OPEC nation.
I hate to admit it, but I really like the new Suburban...and cheap gas makes it more attractive.
Fortunately, I’ve sworn off GM products.
Saudi Arabia is much more concerned with Iran and ISIS than short-term oil profits.
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