Proposed Summit Between OPEC and Non-OPEC Producers Aiming For Minimum $70 Oil

Venezuelan Oil Minister Eulogio Del Pino has echoed Iranian sentiment that most OPEC members want a "fair" price for oil.

Bunker buyers and oil market players alike have been left guessing on where prices will be heading after reports last week indicated a Venezuela lead proposal for a summit between OPEC and non-OPEC oil producers aimed at lifting crude prices was said to be advancing.

Last week Goldman Sachs put its "longer term oil price" forecast at $50 a barrel with a potential dip to $20 per barrel as soon as next month, while "most" Organization of the Petroleum Exporting Countries (OPEC) are pushing for crude over $70 per barrel, according to Iran and Venezuela.

"The minimum, minimum price should be $70," Venezuelan President Nicolás Maduro said last Tuesday.

"Oil at $70 a barrel guarantees investments needed for global energy and economic stability."

It is unclear exactly how much has already been agreed, with a delegation from Saudi Arabia last week reported to have met with their counterparts in Venezuela, and earlier in the month Maduro said he agreed to "several initiatives" with Russian President Vladimir Putin during a visit to China.

However Putin's spokesman Dmitry Peskov said the Russian President "didn't discuss any concrete steps" to lift oil prices.

Nevertheless, Citi Futures Perspective energy analyst Tim Evans believes Venezuela lead talks between OPEC and Non-Opec oil producers will push ahead.

"They are certainly motivated to try and put something together - something that limits production, raises prices, and helps Venezuelan finances," he said.

"I can see the Saudis giving the Venezuelans permission to pursue this idea, without pushing it themselves."

A Fair Price for Oil

In calling for talks, Venezuelan Oil Minister Eulogio Del Pino echoed the earlier sentiment of Iranian Oil Minister Bijan Namdar Zanganeh in wanting a "fair" oil price, something that Zanganeh says most OPEC members believe is $70 to $80 per barrel.

Brent, which has not closed over $70 per barrel since December 2, 2014, ended last week at $47.47 per barrel.

Del Pino has also warned that it is other oil producing nations, rather than his own, who were most at risk if talks fail to progress and be fruitful.

"Our average production cost is less than $10 per barrel and if we go to a price war, it is obvious that the low-cost countries will have certain levels of gains, but we recognize that low-cost producers can't fill the void in worldwide production of oil," he said.

"That's why we are planning these summits."

Despite the tough talk, Deutsche Bank AG analyst Robert Burgess calculates Brent needs to climb to $89 per barrel - a close price last achieved on October 10, 2014 - for Venezuela to balance its budget, and last month ESAI Energy LLC warned the country could be heading for a serious economic crisis with major disruption to its oil and products supply.

The Saudi led decision to ignore price and concentrate on defending market share has, in recent weeks, pushed already low oil prices to six-year lows, helping bunker prices in some ports to crash to their lowest in 10 years.