Crude Reckoning: The Far-Reaching, Unexpected Effects Of Falling Oil Prices

Venezuela’s government has requested OPEC hold an emergency meeting due to a collapse in oil prices that has left the country’s economy in dire straits, sources at the organization said Wednesday.

Following the petition, four delegates from OPEC’s member countries swiftly said a meeting was unlikely to take place, Reuters reported.

Nigeria’s petroleum resources minister of state, Emmanuel Kachikwu, made the case that the African nation and several fellow OPEC states want to meet before the scheduled June 2 gathering as the pain from $30 oil intensifies.

De facto leader Saudi Arabia and other Gulf countries in the organization have declined proposals for similar meetings in the past.

“Venezuela has requested an extraordinary meeting”, said an OPEC delegate from a Middle East member-country.

Oil prices are at their lowest since 2008, dropping to $28 a barrel.

Brent oil in London has dropped more than 60 percent since November 2014, when OPEC chose to refrain from cutting output in the face of a global oversupply in an effort to defend market share.

While it’s a “very bleak picture” for the oil market in the short term, “the market has overshot on the low side, and it’s inevitable to start turning up”, Al-Falih said.

Where the two OPEC members agreed in Davos was that cooperation with outside producers is necessary to stabilize the market, and that a rebound from the current slump is inevitable. President Rafael Correa said Wednesday a cut in production could support prices.

Venezuela is one of the so-called Fragile Five OPEC members most at risk from significant instability amid the turmoil in prices, according to RBC Capital Markets.

“It is not the first time and probably not the last time Venezuela will ask for an emergency meeting”, Giovanni Staunovo, an analyst at UBS Group, said by email.