OPEC’s meeting this Thursday in Vienna may not lead to an agreement to start reducing production, Iran’s OPEC governor said, as quoted by S&P Global Platts. Hossein Kazempour Ardebili said there were tensions between members of the cartel, with some unhappy about others’ large production increases in recent months.
"The cooperation agreement is unlikely to be renewed," Ardebili said. “At least some member states will not join it, in which case any renewal will be out of the question."
Increasing the heat further, the official said some OPEC members might even decide to follow in Qatar’s footsteps and leave OPEC altogether.
The reason, according to Ardebili, is their limited production capacity, especially spare capacity. "Some producers have limited production capacity. Therefore, they may be faced with lower demand for production, while on the other hand, they lack any spare capacity for increased production, if need be," he said, adding "That strengthens the possibility of exit by minor member states. That is not impossible."
Qatar, which produces around 600,000 bpd, announced its decision to leave OPEC earlier this week, citing a focus on natural gas and maintaining its number-one position as gas exporter in the world.
The cartel is meeting tomorrow to discuss production cuts that may range from 1 to 1.4 million bpd. Russia and another nine non-members will join the talks. There have been reports citing Moscow officials that while last time Russia did not mind its cut quota, which stood at 300,000 bpd out of total cuts of 1.8 million bpd, this time the country may not be so willing to cut so much.
“We think 1 million bpd (cuts) is more realistic, not 1.4 million bpd ... But who is going to do this is another question,” the source said, as quoted by Reuters.
By Irina Slav for Oilprice.com
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