Unstable oil prices persist as China scales back extraction

Unstable oil prices persist as China scales back extraction

Emilio Fabio Torsello
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In the run-up to the 30 November OPEC meeting, the price per barrel returns to levels of three months ago. Mexico announces a tender for running 14 onshore sites in 2017

The price of oil continues to be unstable amid anxieties over the possible failure to reach a deal among OPEC members and non-OPEC members during the upcoming 30 November meeting. The price per barrel has returned to the same levels of three months ago, erasing the announcement effect triggered after the Algiers meeting, at which the oil producing nations reached a preliminary agreement to cut output by 1 million bpd. Qatar, Algeria and Venezuela, along with Saudi Arabia, have pushed the hardest to reach an agreement, while too many countries, declarations aside, continue to extract and market oil without interruption. The latter include first and foremost Iran, which has recently had international sanctions against it lifted and is now producing close to 1 million bpd, followed by Iraq, Nigeria, Kazakhstan, Russia and Libya (having just recently reentered the market), to name just a few. This state of affairs certainly doesn’t make agreeing on a crude output cut any easier.
China, on the other hand, is running against the grain, with its extraction rates now the lowest since 2009: 3.78 million bpd, nearly 4 million less than last month. Analysts point to volatile oil prices, which are discouraging businesses from extracting.
Looking, finally, at the market and public tenders, Mexico has announced that it will auction 14 contracts for onshore oil exploration in 2017.