Yet, the likelihood of this meeting seems remote.
The oil minister of Nigeria (Diezani Alison-Madueke), who is now OPEC president, divulged that the Arabic Bloc does not subscribe to the idea of a meeting.
This situation cropped up only after three months since the organization’s last summit. Under pressure from Saudi Arabia, OPEC opted not to react to the plunge of oil prices and appeals made by secondary members. They decided to continue with the production of 30 million barrels daily which was the policy for three years.
This strategy obviously conceived by Saudi Arabian Oil Minister Ali al-Naimi was to stop OPEC’s long-established tactic of lowering production to maintain high prices. Instead, OPEC chose to preserve market share versus oil producers like the USA which resorted to expensive extraction techniques like hydraulic fracturing.
According to Ali al-Naimi, the objective was to bring down oil prices so ineffective production methods will not flourish. However, this approach does not seem effective for OPEC members which are not as wealthy as Saudi Arabia. The two OPEC members, which are in a weak position, are Venezuela and Iran. Both nations have been clamoring for a reduction in production.
The OPEC president remains confident that the meeting of the bloc’s 12 members will push through if the price per barrel goes down further. Saudi Arabia will surely reject this proposal even if prices plunge to $20 per barrel.
DOWNLOAD FREE UFX TRADER APP
START TRADING OIL
No comments:
Post a Comment