Head of energy research OPEC Omar Abdul-Hamid, Minister of energy and industry of Qatar and the head of OPEC Mohammed bin Saleh al-Sada, OPEC Secretary General Abdullah Salem al-Badri (left to right) during the OPEC Summit of Vienna
OPEC summit in Vienna ended without incident – an agreement on the “ceiling” of oil production was reached, the new secretary general of the cartel became the representative of Nigeria. The market reacted to the results of the meeting a drop in prices
Expected decision
As a result of the countries of the Conference – OPEC member cartel could not agree on any reduction of production or even its freezing. This decision was expected. Last month, only one of 27 analysts surveyed by Bloomberg, predicted to reach a consensus on this issue. The lack of consensus allow OPEC to continue to produce oil without restriction, although the group is regularly ignored by his own signs: in the last 15 years, the actual level of production only two turned out to be below the target – two in 2014.
The participants of the discussions told the agency that. before today’s meeting, Saudi Arabia, OPEC’s informal leader, discussed the return to production targets, from which the group gave in December 2015. However, the initiative has not been formalized in a formal proposal. According to Bloomberg, the softening position of Riyadh due to the desire of Khalid Al-Fatiha, appointed the new minister of oil of Saudi Arabia, to begin its work with a successful summit of the organization, which some analysts have already buried.
According to the chief oil analyst of consulting Energy Aspects of company Amrita Sen, the group discussed the establishment of a ceiling of the total production of 32 million barrels. per day, which corresponds with the actual production in April.
Iranian Oil Minister, in turn, made it clear that there is limited production plan attractive. “I do not agree with the establishment of the overall ceiling for OPEC,” – said Bijan Namdar Zanganeh. According to officials, the organization should go back to the individual country quota system, which would be difficult to agree in the framework of today’s meeting. Proposals for production cuts are not sounded. Without the introduction of country quotas at the group members would not be motivated to adjust their production, writes The New York Times. “Without the quota system it is not possible to estimate the contribution of each country in total production – leads edition of the words of the head of research firm Petroleum Policy Intelligence Bill Farren-Price. -. It is absolutely pointless »
Trying to reconcile freezing production within OPEC’s April summit also failed because of the position of Iran, refused to take on such obligations. Earlier, Saudi Arabia and its allies, including the UAE, has consistently stated that the participation of Iran – an essential condition for any agreement. After removing the country from international sanctions, Iran refuses to take on the obligation to limit production before the country returns to dosanktsionnomu level of exports. In April, Iran’s oil production reached dosanktsionnogo level – 3.56 million barrels. per day, according to the International Energy Agency (IEA). Oil exports in the reporting month approached dosanktsionnomu level, an increase of more than 40%, or 600 th. barrels., up to 2 million barrels. day
OPEC Conference -. the supreme body of the organization, convened, as a rule, twice a year. The Conference decides on the admission of new members, according to the Secretary General, the budget, the financial report, and the Governing Council. In contrast to the December meeting, this time between the different delegations in Vienna were a lot of “shuttle diplomacy” – evidence that the group members are trying to coordinate their positions prior to the formal meeting, the analyst said Bloomberg Julian Lee
. An experienced manager
The main outcome of the summit was the decision for a long time standing in front of the cartel staffing issue. Holds the post of secretary-general of OPEC Libyan Abdullah El-Badri had to leave the post as early as 2012 (when completed the maximum allowed for the organization of the General Secretary six-year term of office). Nevertheless, the country’s cartel could not agree on a new secretary general, so the solution the issue was postponed. Now change the general secretary held – at the head of OPEC rose the former head of the Nigerian National Petroleum Corporation (NPEC) Mohammed Barkindo. The new Secretary General is an experienced executives in the oil sector – suffice it to say that in 2006 he had led the cartel, but was also the representative of Nigeria OPEC for more than 15 years
Despite the fact that Nigeria was in favor of freezing production parish. Barkindo the post of Secretary General of OPEC does not mean that such a decision will be made in the foreseeable future. OPEC Secretary General does not deal with the definition of cartel policy, the importance of this figure – rather in the resolution of internal disputes within the organization. As previously stated to Bloomberg head of the consulting company Alfa Energy John Hall, Barkindo “knows how to work the OPEC, he is familiar with many of the delegates,” the post of Secretary General he was “able to provide a mild break the deadlock,” in which the organization has got because of disagreements between Member States (especially Iran and Saudi Arabia). Sources Reuters, who on the eve of the summit was intended Barkindo appointment to the post of Secretary General also explained that the Nigerian is a compromise figure, enough to please all OPEC countries.
Short drop
Despite the fact that the decision to freeze the level of oil production, few people waiting in earnest, the markets reacted to the results of the summit fall. Oil futures Brent crude on the ICE Futures Exchange to a maximum of $ 50.30 per barrel fell to $ 48,64, WTI oil at NYMEX became cheaper from $ 49.47 to $ 47.97 per barrel.
« no action, no surprises did not happen “- said the head of the research division of the oil market Societe General SA Michael Wittner on the outcome of the summit. “It was interesting to see that Saudi Arabia is ready to discuss the establishment of the overall production ceiling, but Iran from its position did not move, and in the end it did not work”, – the expert concludes
Following the fall in oil prices on OPEC’s decision. became cheaper and the ruble. According to Bloomberg chief economist at Danske Bank Vladimir Miklashevskii, OPEC’s decision “expected hit on the Russian currency.” The expert believes that in the short term, “the ruble is in the zone of increased turbulence amid growing external risks».
Shortly after the meeting, OPEC oil played a toll on the US Department of Energy statistics on the reduction of crude oil in storage. As of 19:20 MSK barrel of Brent was worth $ 50,09.
The Return of Gabon
Among the decisions taken during the summit – agreed to return to the African country of Gabon in the cartel after 11-year hiatus. The decision on the accession of Gabon to the OPEC will come into force on 1 July.
Gabon, where proven oil reserves amount to about 2 billion barrels., Consisted of OPEC in 1975-1995, respectively, and left organization because of the inability to pay membership fees. With a daily production of about 240 thousand. Barrels. Gabon will be the most conservative member of the cartel’s oil production.
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