Non-OPEC producers made no specific commitment on Saturday to join the Organisation of the Petroleum Exporting Countries in limiting oil output levels to prop up prices, perhaps discouraged by the fact members of OPEC themselves failed to reach an agreement in the first place.
Officials and experts from Azerbaijan, Brazil, Kazakhstan, Mexico, Oman and Russia convened for consultations in Vienna on Saturday. The only agreement they reached was to meet again in November before the November 30th OPEC meeting, they said in a statement.
A day earlier, OPEC members themselves were unable to agree on how to implement a global deal to limit output after hours of talks amid objections by Iran and Iraq, both of which have been reluctant to reduce output, sources said.
“We have to agree on the real numbers,” non-OPEC Kazakhstan’s vice-minister of energy, Magsum Mirzagaliev, told reporters after seven hours of talks on Saturday.
“It is important that we meet once again with detailed numbers. We agreed that we have to meet in 3-4 weeks with numbers, because every country has his own opinion,” he said.
However, OPEC and non-OPEC said in a joint statement the meeting on Saturday was a “positive development” towards reaching a global output limiting deal on November 30th.
The meeting on Friday exposed old faultlines among OPEC members, particularly when it comes to Saudi Arabia and Iran.
OPEC members have not agreed between themselves on a single set of production figures from which to make the agreed cutbacks, and members including Iraq, Iran, Libya and Nigeria – whose output has been held back by sanctions or conflict – have asked for special treatment in curbing output.
Russia, one of the world’s top producers, which has been supporting joint actions with OPEC, also attended the meeting in Vienna but made no public comment.
Two OPEC sources said Russian energy officials told the gathering that Moscow was still willing to freeze its output levels if OPEC agreed to cap its production.
“Russia is ready but they want to see in detail figures agreed for yesterday,” one of the sources said.
It might remain challenging for OPEC members, however, to reach an agreement. According to an article written by Kamel Al-Harami, independent oil analyst, the secret behind OPEC’s continued strength in the market despite the collapse in oil prices is their 2014 decision to let members freely produce as much as they want.
Not only did this decision keep OPEC on top of the game, the decision also served its interests and protected its market share. For instance, US crude producers were forced to reduce output.
Now OPEC is producing 33.6mn barrels with net increase or gain of over 2.4mn barrels this year while non-OPEC oil producers, which was estimated to produce 59mn by 2017, is now short by 2.4mn, which has been captured by OPEC.
Al Harami said, “Of course, Saudi Arabia had to let go of its swing producer role to safeguard the interests of other OPEC members and to maintain its market share. It has taken place now but with huge financial losses; nevertheless, it is working.”
“The same decision is leading to fewer investments in expensive oils in terms of shale oils, deep water drilling, sand oils of Canada and in the Arctic, which resulted in costs of nearly $1tn and caused some concerns in the Western world such that they, in the coming years, will have to depend on the oils of the Middle East or at least one source from the Arabian Gulf region,” he said.
