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Ecuador may renege on its decision to quit its OPEC membership, according to anonymous sources cited by S&P Global Platts, which was supposed to take effect January 1, 2020.
Ecuador had announced its decision to quit the oil cartel in earlier October, at a time when the country declared a state of emergency as violent protests erupted over the end of fuel subsidies, but is now allegedly having second thoughts. Its membership cancelation would have saved Ecuador around $2 million dollars in the form of an OPEC membership fee.
This $2 million was likely an unpopular fee with the IMF who loaned the struggling country more than $4 billion, and an unpopular fee with its citizens who were none too kind about being asked to forgo the generous fuel subsidies at the IMF’s prodding.
But Ecuador quickly reinstated the subsidies due to the prolonged violence. The public now assuaged, OPEC’s $2 million fee may be a less bitter pill to swallow.
Ecuador’s new energy minister, who was named just a couple weeks ago, has apparently not confirmed whether he will attend this week’s OPEC meeting held in Vienna to discuss the most important matter—oil production cuts and whether they should be extended, deepened, or neither.
Either way, Ecuador’s compliance to its OPEC quota has been less than fastidious. A smaller member, Ecuador was tasked with producing 510,000 bpd or less. October—the month during which protests disrupted its oil production—was the only month this year that it managed to adhere completely (114%) to its assigned oil production cuts, while it failed to adhere to the cuts in each of the nine months prior, according to secondary source figures from OPEC’s Monthly Oil Market Report.
OPEC’s $2 million membership fee probably seems unremarkable compared to what the protests have cost the Ecuadorian economy, according to Platts, at $137 million.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.