The scheduled meeting in April of the Organization of the Petroleum Exporting Countries (OPEC) is set to be cancelled. The meeting was called to estimate the possible impact when, in June, the full impact of the United States sanction on Iran would be felt and the OPEC was to decide whether to increase production because of that event which is expected to cut down supply go crude in the global market. The oil cartel would also have discussed the crisis in Venezuela and its impact on the global oil supply.
The recommendation for the cancellation of the extraordinary meeting scheduled for April 17-18 was made by a ministerial panel of OPEC and its allies on Monday. This means that the OPEC would be meeting next during its regular scheduled meeting to be held on June 25-26.
The global oil market seems to be oversupplied up until the end of the current year, said the energy minister of Saudi Arabia, the de facto leader of OPEC. He also said that a decision on output taken in April would be too early.
“The consensus we heard … is that April will be premature to make any production decision for the second half,” the Saudi minister, Khalid al-Falih, said on Monday.
“As long as the levels of inventories are rising and we are far from normal levels, we will stay the course, guiding the market towards balance,” he added.
While the United States has imposed sanctions on a couple of OPEC members – Venezuela and Iran with the aim of reducing the reach of the two countries into the global oil export market, the US itself in recent months has been increasing production of its own oil.
OPEC therefore is now placed in a precarious and complicated situation with regards to estimating the global supply and demand because of the policy of the oil production and sanctions policy of the US.
“We are not under pressure except by the market,” Falih told reporters before the Joint Ministerial Monitoring Committee (JMMC) meeting in the Azeri capital, Baku, when asked whether he was under US pressure to raise output.
OPEC has been repeatedly criticised by the US president Donald Trump and has accused the oil cartel for the high oil prices. On the other hand, some of the OPEC members have said that the high price is because of the sanction policies of the US government.
In an effort to increase global prices of crude, production cut by 1.2 million barrels per day —1.2% of global demand, was announced by OPEC and its allies in December to be implemented during the first half of the current year.
Monitoring of the oil market and conformity with supply cuts is done by the JMMC, which also includes non-OPEC Russia.
“Until we see it hurting consumers, until we see the impact on inventory, we are not going to change course,” Falih said when asked if he had been updated on whether Washington would extend its waivers for buyers of Iranian crude.
“Our goal is to bring global inventory levels down to more normal levels – and even more importantly, to proactively protect against a glut,” he said.
“Another important metric is the state of oil investments … we are not seeing an investment trend that will get us even closer to the required figures.”
(Adapted from LiveMint.com)