Volume matters

OPEC argues about the need to reduce oil production

At the OPEC meeting, which is taking place today, the issue of changing oil production quotas should be considered. A number of countries are going to come up with a proposal to reduce them, in the opinion of which such a measure can slow down the sharp drop in prices for “black gold” that began in August. In particular, Iran, which is second in OPEC in terms of oil production, announced its desire to reduce the level of oil production through the mouth of Oil Minister Gholamhussein Nozari. “OPEC supplies too much oil to international markets,” AFP reports the words of Mr. Nozari, who does not rule out that the cartel members will indeed reconsider their obligations for oil supplies, which now amount to 29.67 million barrels per day (by 13 OPEC countries). True, Iran, as well as Venezuela and Libya, which are in solidarity with it, according to experts, in order to make such a decision will have to convince the main exporter, Saudi Arabia, of its necessity, which, on the contrary, is consistently increasing production.

The OPEC meeting is taking place against the backdrop of uncontrollably falling oil prices. As reported yesterday by the cartel secretariat, the price of one barrel of the OPEC “oil basket”, consisting of 13 main export grades of oil from all member countries of this organization, amounted to $101.21, which is $2.43 less than on Friday . This is a record low since the beginning of April this year. In August, one barrel of cartel oil cost $112.41. For comparison: in July - 131.22, in June - 128.33, and in May - $119.39.

On the eve of the OPEC meeting, oil prices increased slightly compared to last week, but they are still far from the July record high - then the price of a barrel of WTI on the New York Stock Exchange was $147. Yesterday, amid news of the approaching Mexican the Gulf, where passions have not yet subsided after Gustav, Hurricane Ike, as well as the prospect, albeit vague, of lowering quotas, a barrel of oil cost $108.89, which is $2.66 more than at the close of trading last week.

As the American newspaper The Wall Street Journal reported yesterday, it is precisely this price that does not suit Iran, Venezuela and Libya. According to last year's agreements, exporting countries should produce a total of 29.67 million barrels per day this year. Western countries then stated that quotas, on the contrary, should be increased. Officially, cartel members did not agree to this, and this figure was maintained for a long time. However, recently Saudi Arabia, as the largest oil exporter, has begun to exceed its target. After prices for “black gold” soared at the beginning of the summer, which was blamed on this country most loyal to the West, Saudi Arabia could not stand up to criticism and announced that it would increase production by an additional 250 thousand barrels per day. It was after this decision that prices began to decline from a record level of $147 per barrel and fell by approximately 30% compared to June.

The most consistent critic of increasing oil production has always been Iran, which has repeatedly called on OPEC to reduce it by at least 500-700 thousand barrels per day. Now her position is shared by Venezuela and Libya. However, experts believe that it is unlikely that these OPEC members will be able to convince others to reduce production. “I believe that OPEC will not increase quotas,” Troika Dialog analyst Valery Nesterov told Vremya Novostey. According to him, prices have now stabilized at the level that exporting countries planned: the corridor up to $130 per barrel is very comfortable for them. “After all, if you increase production much, then demand will begin to fall, and if it is too much, then inflation will begin in countries,” Mr. Nesterov believes.

Kirill MELNIKOV