EMEA News
Pressure On Bunkers, Oil to Stay Lower for Longer as OPEC Says Output Cuts "Maybe" at the End of the Year
There were further signs Tuesday that oil, and bunker prices, are set to continue on their lower-for-longer trajectory as a result of prolonged oversupply.
Uncertainty over Iranian oil output and Russia's seriousness about capping its oil production are two of the key reasons why the Organization of the Petroleum Exporting Countries (OPEC) says it is very unlikely to cut output at its next meeting in June.
However, according to OPEC sources and delegates who spoke to Reuters, cuts could come later: "Maybe by the end of the year (a cut could be possible) when it is really clear that Iran is actually producing the volumes they are talking about; but not in June," a Middle Eastern producer said.
The uncertainty over Iran revolves around the discrepancy between a widely-held contention that its oil fields were damaged by years of international sanctions and its claim that it could add up to 1.5 million barrels per day (bpd) to the global market over the next year.
Iran has already told OPEC it pumped as much as 3.4 million bpd in January, which is far more than OPEC watchers estimated.
An OPEC delegate remarked, "No-one at OPEC knows what's going on with Iranian fields, so the Saudis want to see what happens in reality."
As for Russia, whose deteriorating relations with Saudi was recently cited as a reason why a wide-ranging oil output freeze will likely never happen, it will be closely scrutinized with regards to its commitment to the proposed Russia/Saudi/Venezuelan/Qatar output freeze at January levels.
The only time Russia agreed to cooperate with OPEC was in 2001, but instead of honouring its pledge, it actually raised exports.
Still, if the freeze were to occur, it would signal a change in tone for Saudi, and "eventually we will have a cut in production," according to an OPEC delegate.
In January, John Defterios, emerging markets editor for CNN Money, described OPEC as being "deeply divided" and facing "the worst internal crisis in its 55-year history" due to squabbling over its strategy to quash non-OPEC producers.
