EMEA News
OPEC Focusing Pre-Vienna Diplomacy on Iran, Russia - Which Is Holding Firm on a Production Freeze, Not Cut
With only a few days to go before the Organization of the Petroleum Exporting Countries' (OPEC) Vienna meeting to ratify its oil cutback deal, and amid disturbing developments such as Saudi Arabia on Friday saying it will not attend a pre-meeting of non-OPEC members, the cartel is understood to have been focusing its diplomatic efforts on Russia and Iran, in the hopes of increasing the deal's chances of success.
The focus includes a diplomatic trip to Tehran and possible talks with Russia in the wake of the Saudis scuttling the Monday meeting with non-OPEC members.
Cartel members, including Saudi Arabia, have been expecting that Russia will eventually join a reduction, but on Thursday its energy minister, Alexander Novak, stated that his nation's position "has remained unchanged and consistent: as our president said earlier, we are ready to freeze production at the current levels."
He suggested that even a freeze is not guaranteed, calling it "quite a difficult and harsh situation for us as our plans envisioned an output growth next year."
Even though it is widely conceded that a mere freeze could cause other members to scuttle the Vienna summit next week, the analytical community seems to think Russia's stance is positive, not negative.
Emmanuel Kachikwu, minister of state for petroleum for Nigeria, told Bloomberg television, "Russia is as interested in firming up the price as we are."
Alexander Kornilov, an analyst at Aton LLC, said, "While there's actually nothing new from Russia today, Moscow is changing its rhetoric to show its commitment to a deal," and added that "Russia is trying to convince OPEC partners."
Meanwhile, Fatih Birol, executive director of the International Energy Agency, reminded media that even if a deal is reached on November 30, a desired oil price surge could be snuffed out as supply from U.S. producers floods the market.
He also remarked, "Many people expect a freeze or a cut from the Vienna meeting, but we should also think about the next steps after the possible cut or freeze," adding that "This is the first time in the history of oil that investments are declining for three years in a row: as a result, we may see bigger difficulties in a few years time."
Even though the cutback deal has widely been dismissed as ineffective, some observers, such as Jeff Currie, global head of commodities research for Goldman Sachs, thinks that while the cutback deal may be a gesture, it could actually lessen market volatility.
