EMEA News
OPEC Makes Final Diplomatic Push With Russian Support But Without Iran and Iraq Ministers Before Vienna Summit
As the meeting to ratify the oil cutback deal draws near, the Organization of the Petroleum Exporting Countries (OPEC) and Russia will meet on Thursday for a final round of diplomatic talks – but without the energy ministers of Iran and Iraq, both nations of which have refused to reduce their production rates.
It is also said that Saudi Arabia will talk with Russian delegates about possible collective cutback actions; Iraq will be represented by Hamed Al-Zobaie, deputy minister for natural gas affairs, and OPEC governor Hossein Kazempour Ardebili will represent Iran.
Alexander Novak, energy minister for Russia, said on Wednesday that his country is ready to support the OPEC deal and is optimistic that the cartel can agree on the terms of the freeze by November 30; however, he added that a decision had not yet been taken on which date to use for the output freeze: November or January 1.
Furthering the diplomatic push is Mohammed Barkindo, secretary-general for OPEC, who is reportedly travelling to Caracas, Quito, and Tehran for talks in the coming days; Nicolas Maduro, president of Venezuela, said Tuesday he will meet with Barkindo in Caracas.
But these efforts don't detract from the fact, as outlined by an OPEC insider to the media, that OPEC's de facto leader Saudi Arabia will only cut production if everyone agrees to collective action, pledges to share the burden of cuts equitably, and does so in a way that is transparent and has credibility with the market.
Accordingly, experts are indifferent to the last minute meetings. "People are pretty pessimistic right now about a potential agreement," said Bob Dudley, chief executive officer for BP Plc. "You see that in the price."
He added that if the talks fail, prices "will stay around the level we're at."
Still, OPEC insiders insist a positive outcome will be reached. In referring to a possible compromise over Iran, an OPEC source told Reuters, "Whatever it takes to reach a consensus will be taken by the ministers; we cannot leave Vienna on November the 30th without an agreement."
Another anonymous source declared, "It is difficult at some points but I don't see any deadlock; what happened in Algeria gave a lot of hope and impetus and I think people are committed to that."
The latest official voice to express an optimistic view of the impending talks is Scott Darling, head, O&G research, for J.P. Morgan; he told CNBC that although "the oil market really is pricing in no deal being made" and that the Saudis will likely wind up doing most of the heavy lifting, his firm gives the deal a 75 percent chance of being ratified.
Earlier this week speculation was rife that it would be impossible to ratify the deal, in light of OPEC reporting an increase in oil production in October, to a record high of 33.64 million barrels per day (bpd), up 240,000 bpd from September.
