Success of Nov meeting: A new ‘facelift’ for OPEC – Oil industry set to enter new chapter
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Without a doubt, the forthcoming OPEC meeting at the end of next month will be a historic one, with the strong presence of Russia, the biggest oil producer and provided all OPEC members agree to reduce their throughput. |
It must be conditional on total commitment from OPEC and Russia to freeze/reduce production. It will lead to a new historic relationship following the fall of oil prices since 2014. Saudi Arabia had insisted on the condition that the cut must include all oil producers without any exception.
Perhaps, the oil industry will enter a new chapter to include non-OPEC members with low-cost oil producers who can survive with price level of $50-$55 per barrel with conventional oils.
However, it is essential for the meeting to succeed in the presence and with the approval of one of the biggest oil producers which is helping and assisting in bringing discipline and stability to the oil market.
Russia will not wait for us forever. Nor will it try to mediate among the OPEC members again. On two occasions, the oil organization had failed in reaching a compromise with the blessing of Russia. There is the risk of failure in the upcoming November meeting because of the possibility of a last-minute change of mind, particularly considering the case of Iran and its insistence on the fixed number of four million barrels as its future quota when knowing that it is currently producing no more than 3.75 million barrels and could reach 4 million only by the end of 2019.
Such discussions should be held behind closed doors along with other detailed aspects until the big upcoming meeting in Vienna.
The success of the coming meeting will bring about a new phase and a new facelift for OPEC. All of its members must strive towards taking a firm and official stance, as the two biggest oil producers Russia and Saudi Arabia have come a long way to reach the current understanding and commitment to preserve the stability of the oil market. Trivial issues should not spoil this situation and they should not lead to failure of the meeting over selfish gains, especially when all are praising the understanding that the biggest oil producers have arrived at to bridge the gap. With this, OPEC will enter a new phase with a better looking face.
E-mail: [email protected]
By Kamel Al-Harami – Independent Oil Analyst
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