Thursday meet the Organization of Petroleum Exporting Countries (OPEC) in Vienna to try to agree on producing less oil than today.
The goal is to get the oil price, which has fallen from around 110 dollars a barrel in the summer to 80 dollars a barrel today.
– The market flooded with oil, then OPEC must achieve a proper cut for it to monne . In recent weeks it has become more and more uncertain whether they will make it. It has been very hectic meetings, said Thina Saltvedt, chief analyst for oil at Nordea Markets.
– Do not bring all
One of OPEC’s challenges is the sharp rise in US oil production in recent years.
– The US and Russia have become as large oil producers such as OPEC country Saudi Arabia, and it has weakened the cartel power, says Saltvedt.
Torbjorn Kjus, oil analyst at DNB Markets, believes only A few of the OPEC countries will go along with cuts.
– OPEC has no sanctions against countries that do not cut so many countries will continue as before and hope that Saudi Arabia, Kuwait and the UAE takes responsibility and get up the price. This has been common also in the last two times OPEC has cut production.
Kjus said countries such as Iran and Iraq have made it clear that they will not cut production for fear that the decline in revenue just to become bigger than it already is.
– OPEC loses control
According to Qatar’s former oil minister, Abdullah Bin Hamad Al-Attiyah, is the time when OPEC alone could decide how much oil to be pumped up – and thus the oil price – over.
– OPEC can no longer control the market alone. This time must also Russia, Norway and Mexico contribute. OPEC may cut, but supply from non-members will increase, says Attiyah news agency Bloomberg.
Five of the OPEC countries are among the ten largest oil producing country in the world. Norway, with about 1.8 million barrels per produced. today is around 15th place.
For Norway, it is not necessary to join such a collusion.
– Twice before we have cut production, but it was long time ago. Today we conduct a policy of neutrality and let the market decide what the price should be, says Saltvedt.
The possibilities are however larger with the Russia. Saudi Arabia has spent the last time to hold talks with the Russians on energy policy.
– It will be interesting to see if they’ve got them with him to cut production. Russians need higher oil prices to balance the budget, said Saltvedt.
– What are the consequences if the production after meeting continues as today?
– Then prices will continue to remain at current levels and may fall some more. It can become a source of increased unrest in OPEC countries. Several sites use rulers oil money to maintain its popularity.
Lack of cuts may increase Norwegian unemployment
Also for the Norwegian economy is the outcome of the meeting is important.
– Oil companies in Norway are struggling already with high costs. Price remains low, several projects being put on hold. It will affect all companies that provide services and products to the oil sector, and even more jobs could be lost.
If countries are able to cut production enough to get the price of oil up, the Norwegian Treasury fills faster.
An oil of 90 dollars a barrel instead of $ 80, this means increased revenues of 25 billion over a year, according to estimates in the state budget.
Positive for rest of the world
For the world economy is, however, a low oil prices positively.
– It stimulates the economy and redistribute income from oil producers to oil consumers. It will also be good news for traditional export industries here at home because the crown is going to depreciate, says Saltvedt.
Kjus DNB Markets believe the most likely outcome of the meeting in Vienna on Thursday is a fairly modest cuts from the key OPEC countries.
– It may provide a temporary rise in oil prices up to Christmas, but eventually it will fall back to the levels from today.
– Standing entire OPEC cartel in danger?
– I do not think OPEC will unravel, but if there is no agreement on any cuts now, one can wonder what is the purpose at all to have a OPEC, said Kjus.
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