• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 13 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 2 hours How Far Have We Really Gotten With Alternative Energy
  • 4 hours If hydrogen is the answer, you're asking the wrong question
  • 4 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 5 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 17 hours Biden's $2 trillion Plan for Insfrastructure and Jobs
  • 4 days "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)

OPEC Meeting In A Deadlock: Two Of The Top-Four Producers Say No Deal

OPEC Meeting In A Deadlock: Two Of The Top-Four Producers Say No Deal

In a tweet late in the afternoon on Friday, the Wall Street Journal’s financial reporter, Georgi Kantchev, said that OPEC’s technical meeting in Vienna was in deadlock, with Iraq and Iran disputing data on the grounds that OPEC has underestimated their production.

A separate tweet moments later stated that Iraq and Iran “refuse” to freeze their output, according to WSJ sources.

The news that Iraq and Iran may be refusing to freeze may disappoint the markets, but it is not shocking, and follows a pattern we’ve seen unfolding for quite some time.

Most recently, Iraq insisted on Sunday that it should be exempt from any OPEC cuts that were being discussed on the grounds that it needed to maintain production while it continued its fight against Islamic State. At the time, Iraq had scared the markets, not by refusing to take part in OPEC cuts that are said to be finalized on November 30, but by mentioning that it should be producing some 9 million barrels per day were it not for the war, pointing out that other countries had taken a chunk of its previously held market share.

But before that, Iraq and Iran had decided not to send their oil ministers to the OPEC meeting in Istanbul the week of October 10, in a sign that not all OPEC members were on board weeks ago.

But Iraq showed its displeasure at the deal all the way back in late September, when it began to question the method in which OPEC calculated production figures—production figures that would be used to determine who would cut what.

Meanwhile, OPEC long ago implied that Iran would receive some type of pass, with Saudi Energy Minister Khalid al-Falih saying back in late September that Iran, Nigeria, and Libya would be allowed to produce “at maximum levels that make sense”—whatever that means.

Related: Will Electric Cars Be Cost Competitive By 2020?

So if what the WSJ sources are saying is true, and Iraq and Iran are indeed flat-out refusing to freeze their output, this changes nothing other than to offer up some level of certainty to the market. The OPEC deal was on shaky ground from the beginning, and today, it remains on more solid ground that the deal will likely be a no-go.

Although some had hoped that Iraq would join in, the likelihood that they would give up even more market share than what it already lost was always quite slim.

ADVERTISEMENT

This leaves Saudi Arabia, OPEC’s #1 producer, and the United Arab Emirates, OPEC’s #4 producer, holding most of the bag. If OPEC is still committed to cut between 200,000 and 700,000 bpd—and if OPEC grants Iraq—OPEC’s #2—and Iraq—OPEC’s #3—a pass, then Saudi Arabia and UAE should get ready to hunker down and take the brunt of the cuts, or resign themselves to the fact that a cut just isn’t feasible, with two of OPEC’s top four producers are not ready to take part.

For Julianne Geiger for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment
  • The Shadow Broker on October 31 2016 said:
    Why should Iran cut it's production? Oil's domination on this planet is coming to an end. Pump as much as humanly possible before the end.
  • Craig Woerpel on October 30 2016 said:
    I have a solution. The 4 rich OPEC countries (GCC= SA+Kuwait+UAE+Qatar) should agree to buy all Iran and Iraq's oil at, say, $50. Let them produce all they want at that price. They actually can't produce much more than they already are, so they stay status quo but with price security. I&I should jump at that.


    Then the GCC cuts 5% of their 17mbd, or 850 kbd. No one believes the market price increase would be less than 5%, so they not only make more money on their own oil, they also make a profit on what they buy from Iran and Iraq. Everybody's happy. (US shale will pick up, but it may take a year).

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News