According to the oil minister of Iraq, OPEC’s top oil producer Saudi Arabia and top non-OPEC producer Russia are now keen on showing flexibility about agreeing to tackle an oil glut that has pushed prices to 12-year lows.
Adel Abdel Mahdi, whose country is the second-largest producer in the Organization of the Petroleum Exporting Countries, said, “We have seen some flexibility from the brothers in Saudi and a change in tone from Russia.”
His comments, made in Kuwait, boosted Brent crude by 3% to above $31 a barrel, although such an idea has been repeatedly mooted and dismissed for more than a year.
He also mentioned, “This should be finalized and we should hear some solid suggestions coming from all parts, from OPEC and non-OPEC, at least from OPEC.”
A day earlier, senior officials from OPEC and Russia stepped up vague talk of possible joint action to fix the supply glut. OPEC Secretary-General Abdullah al-Badri said other producers should work with the group to tackle swollen global stockpiles so prices can recover, essentially reiterating OPEC’s position that it would consider cutting output only if others pitched in.
Moscow, seen as key to any agreement, has so far refused to cooperate. But Leonid Fedun, vice-president of Lukoil, Russia’s second-largest oil producer, was quoted as saying on Monday Moscow needed to start working with OPEC. OPEC is considering a request from cash-strapped member Venezuela to hold an emergency meeting to discuss steps to prop up prices, and Venezuela has called for a meeting of OPEC and non-OPEC in February.
Kuwaiti acting Oil Minister Anas al-Saleh said they were willing to back an emergency meeting of OPEC, but only if an agenda were agreed in advance.
Adel Abdel Mahdi further mentioned, “It is useless to go to a meeting without deciding up front. We said yes if others are willing to go but we have to decide before, otherwise this will backfire on us. We have to go forward - I think the market needs that but we also look at our partners outside OPEC to do the same.”
OPEC’s Gulf members, led by Saudi Arabia, insist OPEC will not cut production by itself, as this would give up market share to rivals, and expect the market to balance itself over time. Qatar said oil could turn into a bull market before the end of 2016 as investments in the industry were dropping too fast and more companies were poised to go bankrupt while global demand continued to grow.
Dr. Mohamed bin Saleh al-Sada, minister of energy and industry said, “The current price of oil is not sustainable and hence it should change.”