By Gbenga Ogundare
The Organisation of Petroleum Exporting Countries (OPEC) meeting began in Vienna on Thursday amidst recovery in oil prices from less than $30 per barrel in January to around $50 per barrel.
A decision to cut or freeze production looks unlikely at the 169th Meeting of the OPEC Conference,this newspaper gathered Thursday morning.
Saudi Arabia’s Energy Minister, Khalid Al-Falih said the kingdom will not shock the oil market and will take a “gentle” approach as it wants long-term stability.
“(In the past) prices have shot up too high, they have shot down too low and have stayed too low for too long in my view.
“Everybody is very satisfied with the market. The market is rebalancing as we speak. Demand is extremely healthy and robust. Non-Opec supply is declining.
Prices will respond to the rebalancing of the market,” Khaled Al-Falih told journalists in Vienna.
In his opening address, Dr. Mohammed Bin Saleh Al-Sada, Qatar’s Minister of Energy and Industry and President of the OPEC Conference said that “Since we last met in Vienna on December 4, 2015, we have seen further volatility in the global oil market.”
“The OPEC Reference Basket fell from around $38 per barrel in December 2015 to a low of just over $22 per barrel in mid-January 2016, before a steady climb
saw the price rise above $40 per barrel by the end of April and then climb further in May.”
“These recent price developments are welcome; particularly, with one eye on the industry’s future investment requirements.”
“Global exploration and production spending fell by around 20 per cent last year, and a further 15 per cent drop is anticipated this year. This is a major
concern for an industry that generally sees investments increasing year on year to sustain production.”
“With regard to global economic growth, the story remains somewhat patchy. While the estimated 2016 growth of 3.1 per cent is higher than that of 2015,
it has been revised down slightly since our December meeting.”
“World oil demand this year remains healthy, with growth of over 1.2 million barrels per day. The majority of this will come from non-OECD countries, but
OECD countries are also expected to see some growth in every quarter this year.”
“From the supply perspective, in the first half of this year, we have seen a further downward revision to the 2016 outlook for non-OPEC supply. We now
anticipate a contraction of 740,000 barrels per day this year. This is more than 2 million barrels per day lower than the growth of 2015.”
On his own part, Oil Minister Bijan Zanganeh said Opec cannot control anything if it doesn’t set individual country production quotas and insisted Tehran deserved a high quota based on historic output.
Zanganeh said a fair quota for Iran should be 14.5 percent of Opec’s overall oil output.
The group is producing 32.5 million barrels per day (bpd), which would give Iran a quota of 4.7 million bpd – well above its current output levels.
The UAE Energy Minister Suhail Al Mazroui said oil price will pick up in the second half of the year. He also said more appreciation in oil price is needed in order to sustain investment in the sector.
Meanwhile, a former Group Managing Director of the Nigerian National Petroleum Corporation, Mr. Mohammed Barkindo, has emerged as the Secretary-General of the Organisation of Petroleum Exporting Countries.
Barkindo, was nominated by the Federal Government for the position. He served as acting secretary-general of OPEC in 2006.