Might we be seeing oil prices creep up soon? On Friday, Venezuela's oil minister said the country is on the right track to drive oil prices back up. Venezuela proposed a production "freeze" but Saudi Arabia will only play ball if Iran agrees to restrict supplies. http://www.reuters.com/article/us-opec-venezuela-idUSKCN0VL2KL
Since Venezuela's economy is largely dependent on their oil, it is understandable that Venezuela is not suffering from recession. It had drive to increase the price of their petroleum products but their customers shunned their attempt. And instead of losing those valued customer countries, they had to abide by the world market prices. Now Venezuela thinks of halting production to lessen the supply hence a natural increase in price due to greater demand. But Saudi Arabia is still not decided on that. And the lessening of production will only be effective if OPEC will cooperate.
OPEC is dead but I suppose since the low oil prices are bad for the economies of OPEC countries it wouldn't surprise me if they decided to work together on this. They should just leave Iran out of the negotiations because I doubt they'll want to cut production at the time when sanctions have been lifted.
Oil producers will be meeting today and expectations that they might decide to cut production to prop up prices have made oil prices rise a little. http://www.reuters.com/article/us-global-oil-idUSKCN0VO01K Oil prices surged to their highest levels in more than a week as news of a meeting of top officials from the world's biggest oil producers spurred speculation of an eventual deal to tackle a deep supply glut. The meeting is the latest effort by some members of the Organization of Petroleum Exporting Countries to join with non-OPEC producers in curtailing output. By cutting back production, they hope to reduce the existing supply glut that has pushed prices to the lowest in more than a decade.
Last week Russia, Saudi Arabia, Qatar and Venezuela agreed to "freeze" production and following the announcement oil prices edged up slightly. Today, the International energy agency said that it expected U.S shale production to drop this year and also next year making oil prices shoot up by 7% but prices are still very low [$34 a barrel].
The OPEC countries have to do something, because what was meant to be a short-term drop in oil prices feels like a medium-term slump, and a continued, eventual long-term trend will be disastrous for them. They tried to play hardball initially, but they miscalculated. Interesting times.
Just to point out, they have all been saying they WILL freeze output when OTHER countries agree to a freeze. In other words, if other countries do it first, we will follow. But just like cease-fires, you can expect to see these countries ramping up production so that if they do actually have to freeze production levels, those levels will be higher than what they are now. It will be very interesting to see when current numbers get released, I am guessing they will be higher than 4Q15
It hasn't take long for them to go back on their word. After Iran called the proposed oil cuts ridiculous Saudi Arabia's oil minister said they won't cut production. Punish Iran? http://www.nytimes.com/2016/02/24/b...-out-possibility-of-production-cuts.html?_r=0 Following that announcement oil prices dropped to $31.
Yes, I also saw in the news about the Saudi Arabia's declaration. The oil miinister said they will not cut down on the production. It looks like Saudi Arabia is in dire need of money hence the over production regardless if the price gets lower. I agree that it is a measure to punish Iran since Iran is depended on oil and probably has no reserve funds like Saudi Arabia. However, another country is hit hard. Venezuela is already reeling with the price cuts that its economy is already suffering. Venezuela is dependent on oil.