OPEC will meet again on 28 October in Vienna in order to reach an agreement on oil output. The goal remains raising the price per barrel. For the past year at least, the market has suffered from the effects of a production surplus that has made it difficult to sell petroleum for more than 50 USD per barrel. During the organization’s latest informal meeting, held in Algiers on 28 September, both member and non-member states signed a preliminary agreement to cut output by 1 million bpd, without specifying how much of a cut each producer country would have to take on. In other words, everyone agrees on the new strategy, but nobody is willing to make the necessary sacrifices.
In fact, in recent weeks, various countries have announced their complete unwillingness to freeze their crude output, including Iraq, Iran, Russia (considering the statements of Rosneft head Igor Sechin) and Indonesia, as well as Libya, which has resumed exporting, albeit at low levels.
The various players have been grappling over this issue for months. A central conflict is represented by the tense relations between Iran and Saudi Arabia. Tehran – perennially at geopolitical odds with Riyadh – intends to resume its pre-sanction output levels, while the Saudis fear the prospect of losing market shares in that scenario. Meanwhile, the head of Iraq's State Oil Marketing Company, Falah al-Amri, recently announced that his country’s production has surpassed 4.7 million bpd, stating, “We are not going back in any way, not by OPEC not by anybody else.‘ The situation is even more complex, considering the disagreements even within oil producer countries. In Russia, for example, President Vladimir Putin made statements in favor of cutting oil production, only to be contradicted hours later by Rosneft CEO Igor Sechin, who said that the country may start producing an additional 4 million bpd.
The negotiations pose a major challenge for international diplomacy. Venezuela’s energy minister Eulogio del Pino has announced that 12 non-OPEC member states will also be taking part in the Vienna meeting tomorrow, all of them oil producers and exporters: Russia, Azerbaijan, Kazakhstan, Oman, Egypt, Bahrain, Colombia, Mexico, Trinidad and Tobago, Bolivia, Norway and Canada. Norway alone is Europe’s largest crude oil exporter with its strategic reserves in the North Sea. Russia itself is oil giant, and the same could be said of Kazakhstan, which has recently restarted production at its Kashagan Field in the northern Caspian Sea, which is considered one of the most important petroleum discoveries of the last 40 years, with a potential output of 370,000 bpd.