OPEC is just a day away from a historical meeting that could see the cartel act in concert for the first time since 2008 to prop up prices, battered by a buildup of crude around the world over the last two years—and if it fails to agree, it will deal a huge financial blow to the industry.
If the deal gets the go-ahead from all OPEC members, the energy industry will rejoice after months of cutting costs, laying off people and striving for greater operational efficiency, among other belt-tightening measures such as quitting large-scale projects.
If the deal fails, for whatever reason, Big Oil alone stands to lose as much as
At the moment, it seems the chances of either outcome are relatively even, a reality that Big Oil is not too excited about. In fact, the latest reports from the OPEC camp seem to speak of a greater possibility for a failure of the deal than for a success. Big Oil may have to brace itself for some more losses.
First, the Saudis—the drivers of the negotiations that started in late September in Algeria--now
These words raised many hackles, and a day later, yet another urgent OPEC meeting followed. At that meeting, according to reports, Iran and Iraq had
Unnamed sources present at the Monday meeting, however,
Meanwhile, Russian President Vladimir Putin announced after a meeting with his Iranian counterpart Hassan Rouhani that the two countries had agreed to “coordinate their production.” What this coordination would entail remained shrouded in mystery, reinforcing a feeling of suspicion among some observers.
On Tuesday, this suspicion grew as Russia
Perhaps even worse, from the producers’ perspective, is the fact that even if a last-minute miracle happens and everyone in OPEC gets on the production cap bandwagon, the effects of the production cut may well be short-lived. Nigeria and Libya are exempt and expanding their output. Non-OPEC producers such as Brazil and Azerbaijan are doing the same, and Russia is promising nothing more than a freeze at current levels, which are record-high. U.S. output is
Taking 1.1 million barrels of OPEC oil off international markets will just free up more space for other producers who are, for the moment, comfortable enough—or so it seems—with benchmark prices, as suggested by a Reuters
By Irina Slav for Oilprice.com
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