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OPEC and Russia have no immediate plans to increase their combined production despite last week’s call from President Trump for the cartel to start pumping more, Reuters reports, citing Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak.
“The OPEC monopoly must get prices down now!” Trump tweeted last week, after which prices immediately fell. But during the weekend, at a meeting in Algiers, the energy ministers of two of the world’s largest producers seemed unfazed by Trump’s rhetoric.
“Given the numbers we saw today, that (an output increase in 2019) is highly unlikely unless we have surprises on the supply and demand,” said Al-Falih.
“Oil demand will be declining in the fourth quarter of this year and the first quarter of next year. So far, we have decided to stick to our June agreements,” said Novak.
In what is perhaps an ironic twist, OPEC, in its latest World Oil Outlook said it expected oil supply from non-OPEC producers to increase by 2.4 million bpd next year, mainly on the back of higher production in the United States, while at the same time, global demand would rise by only 1.5 million bpd. The WOO, which is a long-term forecast, did not take into account the Iran sanctions and their effect on supply.
One interesting outtake from the Algiers meeting was change in the Iranian rhetoric. So far, Tehran’s officials have been adamant that OPEC should not raise production to compensate for the expected decline in Iranian supply.
Now, however, Iran’s OPEC governor, Hossein Kazempour Ardebili, said, “If there is a fall not only from Iran, but anybody else, it is the responsibility of OPEC and non-OPEC to balance the market.”
Meanwhile, OPEC’s total is falling. In August, the cartel said, OPEC’s oil production was 600,000 bpd less than the amount agreed to in November 2016, with Iranian production down by 300,000 bpd since the start of the year, at 3.58 million bpd.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
That is why I am supporting solar, wind and all forms of alternative power, for in the throes of agony just before oil dies a justified death, there will be even more excessive manipulations.
That is why oil prices surged to more than $80 a barrel in the aftermath of the meeting. And despite extensive pressure by President Trump on OPEC members particularly Saudi Arabia to force oil prices down and save his neck in the Congressional midterm elections in November, his efforts have so far failed miserably. The reason is simply that the global oil market fundamentals are bullish enough not only to withstand his pressure but to counterattack and push oil prices higher.
Oil prices buoyed by robust global oil market fundamentals could exceed $85 a barrel before the end of the year.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London