• 2 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 2 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 2 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 2 days Schlumberger Warns Of Moderating Investment In North America
  • 2 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 2 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 2 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 2 days New Video Game Targets Oil Infrastructure
  • 2 days Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 3 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 3 days British Utility Companies Brace For Major Reforms
  • 3 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 3 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 3 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 3 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 3 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 3 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 4 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 4 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 4 days Russia, Saudis Team Up To Boost Fracking Tech
  • 4 days Conflicting News Spurs Doubt On Aramco IPO
  • 4 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 5 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 5 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 5 days China To Take 5% Of Rosneft’s Output In New Deal
  • 5 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 5 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 5 days VW Fails To Secure Critical Commodity For EVs
  • 5 days Enbridge Pipeline Expansion Finally Approved
  • 5 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 5 days OPEC Oil Deal Compliance Falls To 86%
  • 6 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 6 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 6 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 6 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 6 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 6 days Aramco Says No Plans To Shelve IPO
Alt Text

Kobe Steel Scandal Could Rattle Nuclear Industry

The scandal at Japan’s Kobe…

Alt Text

Why U.S. Crude Exports Are Booming

U.S. crude oil exports are…

Alt Text

OPEC Seeks Help From U.S. Shale

OPEC’s secretary general has asked…

Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for US-based Divergente LLC consulting firm, and a member of the Creative Professionals Networking Group.

More Info

This Is What It Will Take To Seal The OPEC Deal

Oil storage tanks

An anonymous OPEC delegate has just laid out the four fundamental must-haves for sealing the OPEC deal—revealing that the path that lies ahead for the OPEC deal is even harder than many had thought.

This weekend’s OPEC meetings did not resolve long-standing disputes between its members over who was cutting, and who was cutting how much—as a result the technical committee, which is in the unfortunate position of working out the details of the much anticipated and ever-elusive deal, has moved up its meeting to November 21 from November 25, according to Reuters sources.

But another source, speaking only on the condition of anonymity, disclosed some terms that Saudi Arabia—the weightiest OPEC member—said are absolutely necessary if a deal is to be had.

First, according to the source, all OPEC members must agree to collective action. Second, each member must share the burden of the cuts equitably. Third, the cuts must be transparent and be credible as seen by the markets. In other words, members would have to use production figures reported by OPEC, not their own self-reported figures.

This maneuvering by Saudi Arabia—this digging in of its heels—although understandable on its part, since Saudi Arabia is oft the OPEC member stuck with all the heavy lifting. But this who’s going to blink first mentality could very well be the deal breaker that the markets have been fearing ever since the Algiers almost-deal-but-not-quite deal was struck in September.

While the source specified that this laundry list of demands would still allow for Libya and Nigeria to be exempt from any cuts or freezes, Saudi Arabia would expect Iraq to cut production—and to use OPEC production figures to determine how much—and for Iran to freeze production, again, using OPEC figures. Related: Iran Surprises OPEC With A Further 250,000 Bpd Increase

This is a pretty big ask, considering both countries have balked at the idea of using OPEC production figures versus their own.

For Iran, using OPEC-supplied production figures means that Saudi Arabia expects Iran to “freeze” production at 3.7 million barrels per day, versus Iran’s self-reported 4 million barrels per day. And even if Iran agreed to use the 3.7 million barrel per day figure, it is still adamant that its desire is to freeze only after it reaches 4 million per day, which is its pre-sanction production level.

For Iraq, Saudi Arabia is asking for a cut down from 4.6 million barrels per day, instead of Iraq’s figure of 4.8 million barrels per day. Meanwhile, Iraq is still insistent that it should be exempt from the deal because it is still fighting Islamic State.

Saudi Arabia, Iran, and Iraq are OPEC’s largest producers—and are often at odds even beyond oil matters—and without an agreement between them, there will be no deal.

By Julianne Geiger for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Eulenspiegel on November 15 2016 said:
    Let them all be greedy and reject the deal, pumping as much as they can.

    Much luck then with 20$ oil - the more they pump, the less money they will have. And when the last hedge fond has burned his fingers at fracking, nobody has money left to drill, everybody bought a new SUV - then we will see 200$ oil.
  • Jack Ma on November 15 2016 said:
    Great line.....
    "anonymous OPEC delegate"....

    IMHO
  • Bud on November 15 2016 said:
    The math is really straight forward. If Aramco cuts back to 10 Mbpd and forces everyone else to take a 3-5 percent output cut, except for Nigeria, Libya, and allows Iran to freeze at 3.7 Mbpd, they will get OPEC output below 33 Mbpd. If economic growth pics up, the surplus would be gone in a year and traders would need to worry about geopolitics and the Saudis willingness to cut back additionally to raise price by 10 bucks at will.

    These figures leave room for Nigeria and Libya to add a half million bpd combined. What Iraq is doing is saying we are at 4.7 and a cut to 4.4 is greater than 5%. This is a game that Iraq and Iran cannot reasonably win. They both have added about 1.5 Mbpd in the past years. When a stronger opponent tells you he is going to hit you with a left only and you say no, don't be surprised when he knocks you on the floor with his right.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News