"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 25 mins Was Finland’s Universal Basic Income Program A Failure?
  • 1 hour China Goes Long On Gold
  • 2 hours Is It Wise To Trade The Trump Effect?
  • 3 hours The Tech That Telecom Giants Fear Most
  • 5 hours China’s EV Industry Is Booming
  • 7 hours How Will Gold React As North Korean Tensions Cool?
  • 9 hours Is This The Biggest Mining Opportunity Of 2018?
  • 23 hours China’s $33 Trillion Finance Industry Opens To Foreign Investment
  • 1 day Is Bitcoin Cash Overbought?
  • 1 day Financial Sector Reports Record Profits
  • 1 day Iran Bans Crypto Amid Currency Crisis
  • 1 day Markets On Edge As Treasury Yields Spike
  • 1 day Silver Pulls Back Following Breakout Week
  • 1 day Wells Fargo Receives Record-Breaking $1 Billion Fine
  • 1 day Market Sentiment Slips Ahead Of Tech Earning Reports
  • 2 days The Trillion Dollar Space Race
  • 3 days The FANG Stock Investors Should Avoid
  • 4 days Is This The Death Of The iPhone X?
  • 4 days Is London Still The Financial Capital Of The World?
  • 4 days Is Gold Staging A Comeback?
Oilprice.com

Oilprice.com

Information/Articles and Prices on a wide range of commodities: We have assembled a team of experienced writers to provide you with information on Crude Oil,…

More Info

What Does The Next OPEC Meeting Have In Store?

The next OPEC meeting on the 2nd of June will act as little more than a forum for continued altercations between Saudi Arabia and Iran.

The 2 June 2016 OPEC meeting will be held amid a backdrop of oil prices near $50 per barrel, a sharp drop in Nigerian production due to sabotage, turmoil in Venezuela, Saudi Arabia operating with a new oil minister, and Iran aggressively pumping close to pre-sanction levels.

OPEC interactions have become a direct altercation between Saudi Arabia and Iran, with the remaining members reduced to mere observers.

The new Saudi oil minister, Khalid al-Falih, will be attending his first OPEC meeting, but experts doubt he will have the same clout and skills as the outgoing Saudi oil minister, Ali bin Ibrahim Al-Naimi.

"OPEC's unity is now in the spotlight more than ever," said an OPEC official. "Would we ever see a minister that carries the same weight as Naimi? I don't think so, especially as it is clear now that decisions are in the hands of the deputy crown prince," reports The Wall Street Journal.

The Prince outlined his strategy in "Vision 2030", and a major step in that direction is the listing of the state-owned oil company Aramco.

In order to gain additional traction for the proposed listing, the Saudis will continue their aggressive stance in OPEC, and keep all the oil producers on the hook, a glimpse of which was given by the new Saudi Aramco Chief executive Amin Nasser.

"Whatever the call on Saudi Aramco, we will meet it," Mr. Nasser said. "There will always be a need for additional production. Production will increase upward in 2016," reports The Financial Times.

Though Mr. Nasser did not hint at the percentage increase, even a small increase will add to the supply glut, because Aramco produces around 9.54 million barrels per day (bpd).

On the other hand, its adversary -- Iran -- has quickly ramped up production to 3.56 million barrels per day and is on course to reach its targeted output of 4 million bpd.

Iran has increased its market share in the excess supply environment by offering large discounts, undercutting the Saudi and Iraqi prices for their deliveries to Asia.

Though Iran had initially hinted at joining any production freeze once it reached its target of 4 million bpd, the heightened tensions with Saudi show no signs of abating.

"Our main competitor is Saudi Arabia," Amir Hossein Zamaninia, Iran's deputy oil minister for international affairs, said in an interview with The Wall Street Journal.

Mr. Zamaninia said Iran disapproves of increased politicization of the OPEC. "In the Southern Persian Gulf, oil is becoming a political commodity, more than an economic commodity," he said. "OPEC is in a difficult situation."

He said that without solutions to the conflicts in Syria and Yemen, an agreement is unlikely.

The relations between the two warring nations have reached a new low, with Iran refusing participation in the Hajj pilgrimage. The negotiations between the delegates of the two nations ended in conflict.

Considering the existing tensions between Iran and Saudi Arabia, if the OPEC meeting ends without a fight, it should be considered an achievement.

The proposal by the Kuwaiti deputy foreign minister Khaled Jarallah for the member nations to freeze production is a feeble attempt to support prices.

"It is clear that Mohammed bin Salman wants to confront Iran not just in the Middle East but in the energy markets," Amir Handjani, a member of the Board of Directors of the Dubai-based RAK Petroleum, told RT. He said that it was unlikely that Prince Salman will back down now. "And certainly the Iranians are not going to back down either," reports Hellenic Shipping News.

While these two nations continue their slugfest in the OPEC meeting, the smaller nations have no choice but to remain mute spectators, dreaming of their glory days.

 


Link to original article: http://oilprice.com/Energy/Oil-Prices/What-Does-The-Next-OPEC-Meeting-Have-In-Store.html

By Rakesh Upadhyay for Oilprice.com

 

Back to homepage

Leave a comment

Leave a comment