The group’s easy-decision days are over, says Qatar’s Former Deputy Prime Minister and Minister of Energy and Industry
The days when Opec members could all but guarantee consensus when deciding production levels for oil are long gone, according to a veteran of almost two decades of the group’s meetings.
The global glut of crude, which has contributed to a 30% decline in prices since June 19, has left the Organisation of Petroleum Exporting Countries disunited and dependent on non-members to shore up the market, said Qatar’s Former Deputy Prime Minister and Minister of Energy and Industry HE Abdullah bin Hamad al-Attiyah (
“Opec can’t balance the market alone,” al-Attiyah, who participated in the group’s policy meetings from 1992 to 2011, said in a November 19 phone interview. “This time, Russia, Norway and Mexico must all come to the table. Opec can make a cut, but what will happen is that non-Opec supply will continue to grow. Then what will the market do?”
Global demand will increase this year by the least in five years, to 92.4mn bpd, before picking up in 2015 as economic recovery gathers pace, the International Energy Agency said on November 14. Further complicating Opec’s task is the boom in US shale production, which has put the world’s biggest economy on course toward energy self-reliance. US output is expected to grow 12% next year to the highest since 1970, according to the US Energy Information Administration.
Opec has benefited from prices averaging $108 a barrel since December 2011, when the group changed its production target to the current 30mn bpd. Prices began sliding in June, and benchmark Brent crude dropped below $80 this month, threatening the budgets of Venezuela and Iran.
Brent gained 0.3% at $80.60 a barrel on the London-based ICE Futures Europe exchange at 10.12am local time. US West Texas Intermediate has fallen almost 30% since June 20. Opec seeks to halt the collapse while still keeping its share of an oversupplied market.
“Opec had been enjoying easy meetings, and decisions were taken without a sweat,” al-Attiyah said. “Now the situation is different.”
Oil markets are oversupplied by about 2mn bpd, and global economic growth is below expectations, he said. “The US, which was a major market for Opec, is no longer welcoming imports. It’s now striving to become an oil exporter. It’s already exporting condensates.”
Led by Saudi Arabia’s Ali al-Naimi, Opec’s longest-serving minister and the voice of its biggest producer, officials flew from capital to capital for consultations ahead of this week’s meeting. Al-Naimi visited Latin America, and his country’s foreign minister flew to Russia. Officials from Iraq to Libya visited Saudi King Abdullah, and Venezuela’s Foreign Minister Rafael Ramirez met energy ministers from six producers. Iran’s Oil Minister Bijan Zanganeh is to meet with al-Naimi in Vienna about a possible proposal to cut Opec output by as much as 1mn bpd, state-run Mehr News reported on Sunday. Zanganeh also plans to hold talks with Russian Energy Minister Alexander Novak, according to Mehr.
“Opec has in the past reached out to non-Opec member countries Mexico, Norway and Russia to help in the reduction of global oil supplies,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas, said by e-mail from London on November 18.
Supplies from outside Opec increased by a record of almost 2mn bpd in the first 10 months of the year, to reach 57.1mn a day in October, according to the IEA, an adviser to industrialised nations.
In Vienna, ministers and their delegations will gather in the grand hall of Opec’s secretariat building and take turns giving speeches. The ministers will then meet among themselves in a separate room nearby, emerging only after they reach a unanimous decision.
“If Opec asked me for an advice, I’d tell them, ‘Look, you can’t do it alone, you need to seek help from non-Opec producers and make everyone share the responsibility,’” al-Attiyah said.