OPEC meets non-member nations after key oil talks fail

OPEC sources indicated that officials meeting in Vienna to sketch out the details of their plan to reduce oil production failed to reach agreement after hours of talks on Friday amid objections by Iran, Reuters reported.

Later, officials from OPEC countries and non-member nations met in Vienna on Saturday to discuss stabilizing the oil market.

On Friday, OPEC member countries failed to iron out details of the deal in Algiers last month to limit production to a range of 32.5-33 million barrels a day, as Iran raised objections to freezing output.

Meanwhile, six non-OPEC nations attended Saturday’s meeting: Azerbaijan, Brazil, Kazakhstan, Mexico, Oman and Russia, the producer group said in a statement.

From the non-members, only Azerbaijan’s energy minister Natig Aliyev made comments supporting producer action to boost prices, Reuters reported.

Azerbaijan met with Venezuelan President Nicolas Maduro last week and the two countries agreed “that some measures will be taken to stabilize the market,” he said.

“We agreed the price of oil can be around $60 per barrel,” Aliyev added.

Meanwhile, other non-OPEC officials seemed more cautious about joint producer action, with Brazilian official Marcio Felix noting that his country was only attending as an observer.

“Brazilian production will increase in the next few years,” he said.

Energy officials from Russia, on the other hand, said that Moscow is still willing to cap output if OPEC takes similar action.

The high level committee will meet again in Vienna on Nov. 25, ahead of the next OPEC meeting on Nov. 30 to “finalize individual quotas,” Reuters reported citing a source.

Addressing the meeting, OPEC Secretary-General Mohammad Barkindo said that since the Algiers agreement to cap output, “a roadmap for implementation has already begun to take shape.”

“OPEC and non-OPEC must now come together and take coordinated and timely action for the common good of all,” he said, adding that a supply glut persists in the crude market even with rebalancing efforts underway.

“A large stock overhang continues to persist. And today’s excess stocks of around 300 million barrels calls for our collective and urgent action.”

OPEC’s decision in September to freeze output– the first such deal since 2008 – has already exempted Iran, Nigeria and Libya, where production has been hit by sanctions or conflict.

Iraq, OPEC’s second-largest producer after Saudi Arabia, also said it would not cut output as it needs as much funds as possible to fight off Daesh militants. 

“A production agreement without Iraq will have a significantly lower impact on oil prices than a deal including Baghdad,” Ehsan Ul-Haq, principal consultant at UK-based consultancy KBC told Argaam.

“The agreement to reduce supplies is facing headwinds but oil producers will realize that there is no other alternative. Without an agreement, it is going to be hard for Iraq to have enough oil revenues and it might not have adequate funds to pay money to international oil companies (IOCs). It could also discourage investments in the country,” he added.