The forthcoming meeting between OPEC and non-OPEC oil producers, including Russia, could be one of the most fractious in recent years with competing interests and demands at play, according to oil market experts.
The June 22 meeting will see officials from each of OPEC’s 14 member countries meet with non-OPEC producer Russia to discuss what to do next with a deal that has seen them collaborate to curb production in order to support prices.
The meeting comes as the U.S. government is reportedly pushing for Saudi Arabia and other OPEC members to hike oil production. In April, President Donald Trump publicly lashed out at rising prices which have hit consumers hard in the States. In addition, U.S. Treasury Secretary Steven Mnuchin said last month that Washington was trying to persuade oil producers to increase supply and offset the impact of forthcoming sanctions on Iran.
There are also concerns about supply shortages from OPEC member Venezuela, which is experiencing economic and political upheaval. Amid fears over shortages from some major producers, Saudi Arabia and Russia have signaled that they’re likely to gradually revive oil output in the second half of the year — which would likely cause prices to weaken.
Saudi Oil Minister Khalid Al-Falih said in May that the country is “sharing the anxiety of consuming nations” and his comments were echoed by Russian Energy Minister Alexander Novak who said that Russia is ready to increase production soon. But Novak warned that a decision should be taken at the OPEC meeting and should be unanimous. The ministers are due to meet on June 14 ahead of the official OPEC summit.
The OPEC and non-OPEC strategy that has been in place since November 2016 has certainly worked to increase prices from the lows of around $ 25 a barrel in 2014 — when the glut in global supply hit home — to currently trade around $ 75 for Brent and $ 65 for West Texas Intermediate.
Commerzbank’s Weinberg said it is likely that major oil producers at the June 22 meeting will try to reassure consumers that they are ready to increase production if Iranian oil is taken off the market, to allay fears over price rises.
“If the production increase is not in the range of 500,000 plus (barrels per day) I think the market might be disappointed and might push higher. But I think that what is really going to happen is that the Gulf nations as well as Russia will reassure consumers that despite the possibility of Iranian sanctions in the fourth quarter they will be satisfying the needs of the customer.”