EMEA News
All Is Well With Cutbacks, Oil Price Equilibrium is "In Sight": OPEC
Perhaps due to a growing number of experts who says the market is finally rebalancing and despite many others who insist global inventories are still chronically high, the Organization of the Petroleum Exporting Countries (OPEC) is intensifying its resumption of a familiar mantra: that its cutbacks are working and there's no need to fix what isn't broken.
Speaking on the sidelines of the Russian Energy week in Moscow, Mohammed Barkindo, secretary-general for OPEC, told CNBC that co-operation between oil producing countries is working and a new supply cap should be agreed in November: "Together with the Russian Federation and other countries, I can assure you that we are in the process of writing a completely new chapter in the history of oil.
"We would like to carry everyone on board on our way to Vienna on November 30, where we will take a collective decision; it will be a historic decision because it is on the anniversary of the first declaration of cooperation."
When asked if there would be new rules to punish the cartel's many cutback cheats, Barkindo replied, "What I cannot rule out is the continuation of what is working: we started this mechanism in January and every month we continuously review the structure, the mechanism, the level of implementation and we have been in active consultation, not only within the GCC ( the Gulf Cooperation Council) but all other participating countries.
"They are satisfied, we are all satisfied that the structure, as well as the mechanism, is working; so I cannot rule out the current mechanism."
The secretary-general went on to express his confidence that his organization would be able to restore sustainable stability to world oil markets, and that Russia is fully complying with its own obligations (which many numbers crunchers say in fact is not the case).
He also told Bloomberg television that monitoring exports "is a work in progress" and that oil price equilibrium is "in sight.'
But in what must be regarded as the most ironic revelation in the saga of OPEC members led by Saudi Arabia desperately trying to shore up oil prices for their own personal gains, Fitch Ratings on Wednesday suggested that high prices would be a huge risk to Saudi Arabia's efforts to overhaul its economy.
James McCormack, global head of sovereign ratings for Fitch, explained that enthusiasm sometimes wanes for "kick-start reform programs" (such as the Saudi plan to reduce its dependence on oil) when commodity prices move higher: "That is potentially a risk here; it will take continued focus on discipline to maintain many of those initiatives with higher oil prices."
But there's every chance that Saudi Arabia gets what it needs: last week OPEC members surprised many in the analytical community by breaking form and complaining that crude prices likely won't rise due to persistent overproduction.
