Some OPEC members are saying OPEC will do whatever it takes to make all members join the production cut agreement that’s been chewed over since late September—willing or unwilling.
According to a statement by Venezuela’s President Nicolas Maduro, “There is sufficient will among OPEC countries to take the step we need to take in the month of November, (to reach) a forceful agreement to reduce production and construct new mechanisms to stabilize the market.”
Maduro was speaking in a televised broadcast, following his meeting with OPEC secretary-general Mohammed Barkindo in Venezuela. Barkindo, for his part, was quoted by media as praising Maduro for Venezuela’s efforts in spearheading the production cut drive, which is a logical push on Venezuela’s part due to their dire economic straits on the back of low oil prices.
Earlier today, Radio Free Europe reported that Russia’s Energy Minister Alexander Novak has confirmed that the country is on board with the production cut plans, although Russian sources quote him as saying nothing more specific than, “Russia will take part in decision-making regarding the rebalancing of the market,” which is a far cry from any commitment.
Novak did say that he was optimistic about OPEC reaching an agreement on joint action.
Yesterday, media also reported that Saudi Arabia’s Khalid Falih has plants to meet Novak later this week in Qatar, suggesting that the push for a cut agreement may have entered its final phase. What remains unclear, however, is how exactly OPEC will force its unwilling members to do meaningful cutting.
Maduro himself did not go into detail on this question, saying only that the OPEC agreement should “guarantee a realistic and balanced price for those countries that have (oil reserves),” which is hardly news as this is supposed to be its primary purpose.
OPEC’s history has seen some members leave the cartel only to return later. Today, with a growing number of industry observers arguing that OPEC is losing its relevance for international markets, the Opexit option may become more attractive for a producer such as Iran, for instance, which holds no great love for powerhouse Saudi Arabia, the group’s undisputed leader in practicality if not in name.
Withdrawal from the organization could also become the preferred option for other OPEC members as well.
By Irina Slav for Oilprice.com
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