Saudi Arabia set to come under fire at OPEC meeting but not expected to back down over production levels
Smaller nations are expected to put further pressure on Saudi Arabia to reduce oil production levels later today when cartel members meeting in Vienna.
OPEC made the historic decision to maintained its production levels last year despite a more than 50 per cent fall in price over the past 18 months.
City PM understands Saudi Arabia will not move on output unless non-OPEC oil producers, including Russia, also agree to a reduction.
Russian Energy Minister Alexander Novak has that a production cut is not viable for the country and it’s not planning on taking part in the OPEC meeting.
Spencer Welch, director at IHS Energy, said:
A change in the amount of oil coming out of OPEC is unlikely. If we look back 30 years, there was a battle for market share, and Saudi lost market share. not going to make the same mistake twice.
Other OPEC countries will be pushing for an decrease in production.
Venezuela and Ecuador are calling for OPEC to cut output after their economies have been devastated by the tumbling price.
Iran will be upping its production next year when sanctions are expected to eased against the country.
At the last meeting of OPEC members in June, there was only mild criticism of Saudi Arabia’s refusal to reduce production.
Michael Hulme, manager at the Carmignac Commodities fund told City PM: "Most other members would go along with the Saudi plan. That is to take the pain now and earn the gain later. OPEC has almost put shale production into proper decline.”
Pascal Menges, Portfolio Manager of LO Funds said: “Although there are many calls for a production cut, we think it is unlikely that Saudi Arabia will agree.”