Opec Puts Pressure On Rivals Over Price Slump

Abu Dhabi. The Opec oil cartel has issued its strongest plea to date for a pact with Russian Federation and rival producers to cut crude output and halt the collapse in prices, warning that the deepening investment slump is storing up serious trouble for the future, The Telegraph reports.Abdullah al-Badri, Opec’s secretary-general, said the cartel is ready to embrace rivals and thrash out a compromise following the 72pc crash in prices since mid-2014.

As I write, the Opec basket of crude price stands at $23.85 (Dh87.53) a barrel, down from $110 a barrel in June 2014, prior to its’ – or some of its members’ – policy to chase market share. “News of record-high oil supply from Iraq put pressure on prices”.

“We have seen some flexibility from the brothers in Saudi and a change in tone from Russia”, Adel Abdel Mahdi, whose country is the second-largest producer in the Organization of the Petroleum Exporting Countries, said.

OPEC is alive and well, but the oil producing cartel can’t stabilise the market for crude without cooperation from other producers outside the group like Russia, Ms al-Fuzaia said. Global demand is forecast to increase by about 1.3 million barrels a day while non-Opec supply is expected to contract by about 660,000 a day, he said.

Al-Badri expressed confidence that the market will overcome the current period of low prices.

“This should be finalised and we should hear some solid suggestions coming from all parts, from OPEC and non-OPEC, at least from OPEC”, the minister said.

Abdalla El-Badri warned that producers would continue to suffer without co-operation to end a supply glut.

Venezuela has insisted on an extraordinary OPEC meeting, but one has to wonder what it might achieve. It will definitely be so in Iran as the United Nations sanctions are lifted.

The Qatari minister, whose country holds OPEC’s rotating presidency this year, said the request was being considered although he declined to say if he was in favor.

“With low oil prices, hopefully, demand will also increase beyond 1.2 million barrels [a day in 2016]”, he said.

Barclays said the capitulation over recent weeks is much like the mood in early 1999, the last time leading analysts said the world was “drowning in oil”.