OPEC Makes Media Case for Lower Production, but Venezuela Intent on Upping Output Anyway

Malaysia's president said it doesn't matter what OPEC does.

The Organization of the Petroleum Exporting Countries (OPEC) on Monday was in full throttle media relations mode, taking pains to explain why it may decide to reverse course next month and cut back crude production - but despite the optimism of its secretary general, other countries seem determined to boost instead of lowering output, and Malaysia dismissed the cartel's plotting as being irrelevant.

Mohammad Barkindo, secretary general for OPEC, told Bloomberg television that after "thoroughly" studying data and projections from a variety of sources, "the conclusion we all came to is that at the moment...the market is still relatively in a state of balance, there's no cause for alarm; but projecting into 2019, because of a variety of factors, among which are rising non OPEC supply in particular from the United States," supply could overtake demand in 2019.

Barkindo went on to note that "the decision on what to do can only be taken by the conference in December" - a reference to OPEC's formal meeting in Vienna.

When asked to comment on Russia's apparent reluctance to reverse course and curb its own output, Barkindo praised the former Soviet Union for its "leadership" in helping OPEC achieve market balance and stated that "I am confident we'll continue in this collective fashion irrespective of the decision we take...in Vienna."

He added that he has been in talks with other OPEC members, including Libya and Nigeria, but he refused to speculate on whether they would be amenable to cutting production other than to state he was "optimistic" a consensus could be reached.

OPEC has always been known for its in-fighting and strained relations between members, a phenomena that has increased in recent years as it tries to remain relevant in a market now dominated by U.S. production; and if the example of Venezuela is any indication, there could be considerable squabbling in December when the cartel convenes to discuss strategies in 2019.

Manuel Quevedo, oil minister for the Bolivian republic, told media that his country is hoping to steeply raise oil output next year: he stated that current production is 1.5 million barrels per day (bpd) and he aims to increase that by 1 million bpd "soon".

However, he added that he will "respect" any new deal if OPEC agrees to reduce output.

Exhibiting considerably less respect for OPEC was Mahathir Mohamad, prime minister of Malaysia, who on Monday told reporters that "OPEC is not effective: they are always at loggerheads with each other, so they cannot make decision."

When asked whether it should take action to stabilize plunging crude prices, Mohamad replied, "What is more important is the production of shale oil from America."

Although intangible, the rise in frequency of OPEC's media relations seems to correlate with a rising sentiment that craves less regulation and more free choice about production particulars: presumably this is what recently motivated the King Abdullah Petroleum Studies and Research Center in Riyadh to examine what might happen to oil markets without the cartel.