• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes Middle East on brink: Oil tankers attacked off Oman
  • 8 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 3 hours Here We Go: New York Lawmakers Pass Aggressive Law To Fight Climate Change
  • 1 hour Iran downs US drone. No military response . . Just Completely Destroy their Economy. Can Senator Kerry be tried for aiding enemy ?
  • 5 hours The Inconvenient Truth Of Electric Cars
  • 5 hours Ireland To Ban New Petrol And Diesel Vehicles From 2030
  • 1 hour Oil Demand Needs to Halve: Equinor
  • 15 hours Win Against Tyranny: Turkey's Opposition Strikes Blow To Erdogan With Istanbul Mayoral Win
  • 14 hours Green vs. Coal: Bavaria Seeks Fast-Track German Coal Exit in Snub to Merkel Plan
  • 6 hours NATO Article 5: Attack on one member is attack on all. Members all must come to defense . . . NOT facilitate financial transactions to circumvent and foil US Sanctions. Somebody please tell Angela.
  • 3 hours Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 2 hours The Plastics Problem
  • 2 hours Hydrogen FTW... Some Day
  • 5 hours Is $60/Bbl WTI still considered a break even for Shale Oil
  • 51 mins Section 232 Uranium
  • 12 hours California and Oil
  • 5 mins Solar Panels at 26 cents per watt
The LNG Shipping Market Is Set For A Bull Run

The LNG Shipping Market Is Set For A Bull Run

In contrast to the volatile…

How To Buy Gold For $3 An Ounce

How To Buy Gold For $3 An Ounce

Gold is once again gaining…

Saudis Feel Pressure As Key OPEC Members Call For Changes

As OPEC’s meeting looms, yet another oil producing country is urging the group to shift its strategy away from a price war with competing producers and act to boost the price of crude.

The latest country to call for higher prices is Iraq, whose oil minister, Adel Abdel Mahdi, called for unspecified collective measures to boost oil prices in the coming year. But he stressed that OPEC should be careful to maintain a unified front in addressing the issue. “We should wait and see what decision will the OPEC members made on the Dec. 4 meeting in Vienna, Austria,” Mahdi said Saturday at the Gas Exporting Countries Forum being held in Tehran. “Though any of the members have their own view, the OPEC unity should be maintained.” Nevertheless, Mahdi complained that current prices are unsatisfactorily low.

Iraq’s call for a solution was far milder than that of non-OPEC member Oman. On Nov. 9, the Gulf state’s oil minister, Mohammed bin Hamad al-Rumhy, denounced OPEC’s current strategy of maintaining the cartel’s production at 30 million barrels per day.

Related: The Elephant In The Room At The Paris Climate Conference 

“This is [a] man-made crisis in our industry we have created,” al-Rhumy said. “And I think all we’re doing is irresponsible.” He said oil “is a commodity that if you have 1 million barrels a day extra in the market, you just destroy the market. We are hurting, we are feeling the pain, and we’re taking it like a God-driven crisis. Sorry, I don’t buy this, I think we’ve created it ourselves.”

The OPEC strategy, designed by Saudi Oil Minister Ali al-Naimi, is to wage a price war on OPEC’s biggest competitors, oil companies using the relatively expensive technology of hydraulic fracturing, or fracking, to extract generous amounts of oil, principally in North America. Although breakeven prices vary depending on the company, many North American shale producers need oil prices much higher than the current mid-$40s per barrel in order to turn a profit.

In the past, Saudi Arabia has been a “swing” oil producer, increasing or decreasing production as warranted to keep the price of crude at acceptable levels. But at OPEC’s meeting in Vienna in November 2014, al-Naimi persuaded the group to maintain production, despite an oil glut, arguing that most oil-producing countries could survive a period of low prices as they regain market share.

Related: Energy Storage Tech Finally Starting To Compete With The Grid

Certainly Saudi Arabia is rich enough to weather such a storm, but not all oil-producing countries have that luxury. Before last year’s meeting, countries such as Libya and Venezuela, whose economies already were under pressure, were urging the group to shore up prices. Al-Naimi, though, convinced the cartel that “the market will stabilize itself eventually,” and won unanimous approval of the strategy.

Despite the growing calls for some sort of mechanism to raise prices, it doesn’t appear that OPEC will change its tack, according to Iran, a member of the cartel. The country’s oil minister, Bijan Zanganeh, said Saturday that at its meeting, the cartel probably will stick with its ceiling of 30 million barrels of crude per day.

Zanganeh repeated his expectation that within six months of sanctions on Iran being lifted, his country will be producing 1 million barrels a day. Amir Hossein Zamaninia, Iran’s deputy commerce minister, said that amount shouldn’t break through OPEC’s production ceiling.

Related: Oil Finds Some Support As WTI Hits $40 Mark

Zanganeh complained that OPEC itself is breaching its self-imposed limit, but said that won’t affect Iran’s production plans. “I asked them to reduce production and to respect the ceiling,” he said, “but it doesn’t mean we won’t produce more because it is our right to return to the market. … It is a sovereign right.”

By Andy Tully

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

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