OPEC will wait until after the U.S. presidential election on November 8 before deciding whether it will invite the US head of state to attend the cartel’s Vienna meeting on November 30, the organization’s Secretary General Mohammad Barkindo told reporters in London on Tuesday.
At the meeting in Vienna, OPEC members are expected to discuss and possibly decide on the specifics of the planned deal to agree to limit production to a range of between 32.5 million barrels per day and 33 million bpd—and apparently not every potential US-presidential hopeful is up to snuff for OPEC.
It’s unlikely that the US is waiting by the phone with breathless anticipation for an invite to discuss how the cartel can best manipulate prices upward in lieu of letting the market do the job—an action that goes against the very fabric of the United States’ free market concept.
According to US Energy Secretary Ernest Moniz, the US does not support any oil quotas—even quotas the US is not a party to. “We think there should not be a setting of quotas by various countries, as is being discussed.” Moniz also added that the US has conveyed this sentiment to the Saudi Energy Minister on multiple occasions.
Following the initial cheer to the news that OPEC had reached a deal-to-work-toward-a-deal for the first time since 2008, the market and analysts realized it was a bit early for celebration, given OPEC’s track record of not sticking to its agreements, and various geopolitical power plays within and outside the cartel.
Last week, crude oil prices surged on the words by Russian President Vladimir Putin who said that his country was ready to join OPEC’s efforts to reduce global oil supply. Then Russian Energy Minister Alexander Novak said that freezing crude oil production for six months with an option for an extension would be the most appropriate and efficient way to rebalance the market.
On Tuesday, OPEC’s Barkindo told reporters on the sidelines of the Oil & Money conference in London that Russia was sticking to its commitment to contribute to output limits if OPEC were to reach a deal in Vienna.
The official also voiced optimism that the cartel would be able to reach an agreement without too much dissent over the production levels that each country should maintain.
Although the deal does not have “exemptions” per se, Barkindo said, as quoted by Reuters:
“The Algiers accord was all-inclusive. All 14 member countries agreed to this ceiling, that gives us flexibility in implementation to take into account the special circumstances of some of our member countries, including Iran.”
OPEC will also have to consider Libya and Nigeria that have been recently increasing their production following months of unrest and conflict. It also has to appease Iraq and Venezuela, which are questioning the way OPEC estimates the output of each member state.
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By Tsvetana Paraskova for Oilprice.com
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