OPEC deal depends on Russia?
Tuesday, October 11
“If Russia can push other non-OPEC countries to be willing to comply, there is real chance of an oil output deal in November, “Cyril Widdershoven, Middle East geopolitical specialist and energy analyst, partner at Dutch risk consultancy VEROCY and SVP MEA-Risk, believes.
Non-OPEC countries need to cut production, as their government revenues depend largely on oil and gas, so better to have higher prices than low prices and volumes, he told Trend commenting on the possibility of non-OPEC countries’ joining the OPEC output deal.
“The fact that OPEC members and non-OPEC countries will be meeting up, unofficially, means that there is a movement going on to come to a production freeze. I don’t believe it will be a total production cut,” said the analyst.
Widdershoven pointed out that if OPEC and non-OPEC countries can arrange to keep production levels to current levels, the market will stabilize.
“Russia's production increase is at present a decision made by Moscow. The market doesn’t need it, but Moscow does,” said Widdershoven. “Financial reserves of Russia are being depleted, leaving currently no other option than to discuss a production freeze by all.”
The Istanbul meeting needs to be seen as a step towards November OPEC meeting, the analyst said, adding that if Russia can push other non-OPEC countries to be willing to comply there is real chance of a deal in November.
However, he said that right now, this week, no deal is to be expected, only hope for a positive vibe.
“The other issue will be Iran and Iraq. If possible arrangements can be made there, the market could be really come to a deal,” added Widdershoven.
“Overall, market fundamentals are positive. Production and demand are going to be break-even, so stability can be assured in coming months,” he added