OPEC has sent invitations to 12 producing countries that are not members of the organization, to discuss market rebalancing measures a day before OPEC’s official meeting on November 30.
The countries, according to Eulogio del Pino, are Russia, Kazakhstan, Azerbaijan, Oman, Egypt, Bahrain, Mexico, Colombia, Trinidad and Tobago, Bolivia, Norway, and Canada. China is the notable exception to this list, as both a major producer and major consumer of crude oil. China was also referred to as a wild card by one analyst, capable of undermining OPEC’s freeze efforts.
The Asian nation has been buying a lot of crude over the last year and a half, after prices slumped enough, and currently has substantial reserves whose actual size nobody really knows for sure. If OPEC reaches a deal and prices rise, says Jodie Gunzberg, and if China decides to use these reserves instead of buying more expensive crude on international markets, the effect of the production freeze may well be wiped out in short order.
The presence of Canada on the list is also interesting: the country sells almost all of its export crude to the U.S., and the commodity is vital for some regional economies as it is the main source of government revenues. It’s doubtful whether Canada would have any interest in capping production in tune with OPEC.
So far, according to Del Pino, only Russia and Kazakhstan have accepted the invitation to the November 29 meeting. Russia has been consistent in its stated support for a production freeze, but nothing specific is coming from Moscow.
On the contrary, Energy Minister Alexander Novak, who has become one of the most quoted people in the energy media, is being as vague as he can, repeating that the oil market rebalancing needs a concerted effort on the part of all stakeholders. At the same time, he hasn’t even made clear whether Russia would freeze its production or be willing to cut it from the historic highs of 11.11 million bpd reached last month.
The United States was also absent from the list, at least not as of today, although an invitation to the ball, whether on Nov 29 or Nov 30, was or is being held pending the outcome of the US presidential elections.
By Irina Slav for Oilprice.com
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