Falah Al-Amri, Iraq's governor to the Organization of Petroleum Exporting Countries (OPEC), claimed on Thursday that the time is right for top oil producers to come to an agreement over lowering output of the valued commodity.
Speaking at an energy event in the United Arab Emirates (UAE), Al-Amri claimed the price of oil would not cross the US$50 per barrel threshold unless the fourteen OPEC member states reach a pact to curb output. This could come as soon as next week, as OPEC representatives might hold an extraordinary meeting following informal talks on the sidelines of the International Energy Forum (IEF) next week in Algeria.
Al-Amri, who also serves as director general of Iraq's Oil Marketing Company (SOMO), advocated a cap as "the only way to support the oil price" prior to a conference similar to the IEF last April in Doha, Qatar. His suggestion was ultimately rejected, though he was confident that the upcoming talks in Algiers would be "a little different."
"There was no deal because the circumstances weren't ready to strike a deal. This time they have to do something," said Al-Amri, according to Albawaba Business.
Energy secretaries of other key oil producing states are not as enthusiastic as Al-Amri regarding freezing output.
"We are not … targeting a decision, we are meeting for consultations," cautioned UAE energy minister Suhail Mohammad Faraj Al Mazroui.
Government representatives of Saudi Arabia, whose oil production reached a record high of 10.67 million barrels per day in July, have given mixed signals. According to the Investor's Business Daily, oil minister Khalid al-Falih said in August that a freeze wasn't necessary, while Foreign Minister Adel al-Jubeir claimed the government would accept a production cap.
Nevertheless, the possibility of unity over oil production, along with a variety of other factors, has given a boost to investors, who on Thursday pushed up West Texas Intermediate and Brent oil futures by 2.6 percent and 1.8 percent, respectively.
"The Saudi talks with Iran increase the likelihood of an agreement next week," said Bob Yawger, director of the futures division at Mizuho Securities USA Inc., to Bloomberg. "The Iraqis are saying it's the right time for OPEC to make a deal, which is also supportive."
By Erwin Cifuentes for Oilprice.com
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Erwin Cifuentes is a Contributing Editor for Southern Pulse Info where he focuses on politics, economics and security issues in Latin America and the Caribbean.… More