Site Loader
Rock Street, San Francisco

Mohammed Barkindo, the secretary-general of OPEC said late Saturday that no decision would be made at
informal talks among the cartel’s members in Algeria on September 28. “It is an informal meeting, it is
not a decision-making meeting,” Mr. Barkindo told Algerian state media organization. Barkindo also told
Algerian news that if members reach a consensus on action they will call an emergency meeting to make a
production decision. Barkindo dampened expectations of a formal deal, cleverly lowering the bar for
success. Any hint of an emergency meeting to come would be enough to rally oil. Perhaps this is why
Barkindo remained “optimistic” about the informal meeting next week.

The biggest problem facing OPEC advocates of a freeze are three countries—Libya, Iran and Nigeria—which
are hoping to achieve significant production increases this year. Iran is well on its way to meeting its target,
but fighting in Libya shows they have little hope of meeting their goal. The Petroleum Facilities Guard and
the Libyan National Army (LNA) recently locked horns again, at the Ras Lanuf port, which halted the
loading of the first export-bound oil cargo at the port since 2014. The LNA took over Ras Lanuf, along with
Es Sider, Zueitina, and Al-Brega last week, after they’d been held for years by the PFG. The major stumbling
block, Iran, has continued to hold on to hopes of reaching pre-sanctions levels. According to Iranian news,
this should be achieved in several months.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

Though this September meeting in Algiers won’t produce the deal coveted by oil markets, tones have
drastically changed. Earlier this month, Putin himself commented on the oil situation, which is rare, stating
that the largest oil producers should freeze, with the exception of Iran. “Iran is starting from a very low
position, connected with the well-known sanctions in relation to this country. It would be unfair to leave it
on this sanctioned level,” he said. Russia, being a major player in this oil game, could be influential in
getting other countries to agree to a freeze while keeping Iran exempt. Russia needs oil over $40 to be on
a fiscally sustainable path and Putin seems motivated to ensure that oil stays over this minimum

Iran, though they are against freezing at this time, has chosen their words more carefully than in the past
(and their attendance of the meeting is a good sign). “There is no technical barrier for Iran joining the
freeze plan,” said the Managing Director of National Iranian Oil Company (NIOC), Ali Kardor, “but it is up to
the minister to make the final decision.” This quote is vastly different than statements made earlier in the
year where Iran rarely hinted at any sort of cooperation, instead making strong accusations against their
rival Saudi Arabia. This time around, there has been a lot less verbal hostility between the two countries.
Iranian President Hassan Rouhani has even come out with a more hopeful statement: “Instability and
falling oil prices are harmful to all countries, especially oil producers…Tehran welcomes any move aimed at
market stability and improvement of oil prices based on justice, fairness and fair quota of all the oil
producers.” He stopped short of agreeing to a freeze, but the conciliatory tone is noticeable.

The geopolitical tensions between Saudi Arabia and Iran continue to be the biggest obstacle in regards to
an oil deal. Saudi Arabia and Iran remain bitter rivals, but they have cooperated before when it came to oil
despite their differences. That cooperation might not happen this month, but if cooler heads prevail in
Algiers, chances are that a basic production agreement will happen by the November 30 official OPEC
meeting. This would not be a rigorous country by country cap, but rather an offering to markets to remain
patient until oil moves back into balance next year. 

Post Author: admin


I'm Dora!

Would you like to get a custom essay? How about receiving a customized one?

Check it out