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The technical committee in charge of hammering out the details of an OPEC-wide production cut will meet for a fresh round of discussions on November 21, according to an energy industry source in Algeria. Previously, the meeting was scheduled for November 25.
The source spoke to Reuters on condition of anonymity, also said that the decision on the new date was made by Saudi Energy Minister Khalid Falih and his Algerian counterpart Nouredine Bouterfa. The two met in Algeria over the weekend.
Since the first OPEC meeting in Algeria at the end of September, when a general agreement for a production freeze was achieved, there has been a wave of other meetings between individual OPEC members such as Venezuela and Iran and outsiders such as Russia, on which the deal’s effectiveness depends. This is the first market-rebalancing initiative undertaken by OPEC since 2008.
With its patience strained by the reluctance of some members to freeze production, most notably Iran, and others’ insistence that they be included in the exempted group, such as Iraq, Saudi Arabia recently threatened to raise production to 11-12 million bpd.
The situation has been aggravated by record-high OPEC output for October at 33.64 million bpd, which is substantially higher than the band agreed to at the September meeting in Algiers: 32.5-33 million barrels.
Those OPEC members that were exempted, such as Iran, Nigeria and Libya, are ramping up production as fast as they can to make up for market share loss, adding to the glut. So, it is abundantly clear that a simple freeze will not do. Saudi Arabia has said earlier that it was willing to cut its production, but it remains to be seen if all the other OPEC members outside the exempted group will also agree to do so, not to mention Russia, who might not be willing to cut at this stage.
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.