Venezuela's proposal to cut oil production and up prices receives little echo

Thursday, October 22nd 2015 - 06:51 UTC

Full article 4 comments

Saudi Arabia and other Gulf states pushed OPEC's strategy shift last year to defend market share rather than cut output to support oil prices

Currently Venezuela is the one trying to bring together OPEC and non-OPEC producers and make coordinated production cut in order to stabilize oil prices.

Russia and Mexico – non-OPEC countries, which have been invited to participate Venezuela-proposed meeting this week – have no intention to cut oil production, International Oil Daily reported.

In total eight countries - Brazil, Colombia, Azerbaijan, Kazakhstan, Norway, Mexico, Oman and Russia have been invited to the technical meeting of oil experts from OPEC and non-OPEC countries taking place in Vienna.

Meanwhile Reuters reported citing Russian Deputy Energy Minister Anatoly Yanovsky, as he doesn't ”think that some artificial production cuts will have a significant impact on (price) change.“

Mexico, too, said it ”will not take part in any reduction in production volume“.

Saudi Arabia and other Gulf states pushed OPEC's strategy shift last year to defend market share rather than cut output to support oil prices, which experienced a historic fall as US oil prices fell below $40 a barrel on Aug. 28 for the first time since the 2009 financial crisis.

OPEC last met this summer in Vienna, when it agreed to leave its production ceiling unchanged at 30 million barrels per day. The next meeting of the cartel will take place on Dec. 4.

Currently Venezuela is the one trying to bring together OPEC and non-OPEC producers and make coordinated production cut in order to stabilize oil prices.

The country unveiled a bold new oil strategy this month. The proposal would reapply the old mechanism of progressive production cuts to control prices, with a ”first floor” of $70 per barrel and a later target of $100 per barrel.

Categories: Economy, Energy & Oil, Politics, International.

Tags: oil production, Organization of the Petroleum Exporting Countries OPEC, Venezuela.

Top Comments

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Skåre Anti-K.
Good luck with that one .. cretins. Unfortunately none of the other invitees have an economy that is so knackered that a packet of condoms costs the equivalent of more than 15 barrels of oil (yup, a packet of 36 condoms in Venezuela is now the equivalent of more than 800 dollars at the official exchange rate).

Unlike 1973, almost all the other oil producers now have substantial sovereign wealth funds (Norway and its 5 million citizens, for example, have a sovereign wealth fund that is larger than the combined GDP of Argentina and Venezuela) and the capital in these funds is largely invested in economies that benefit from lower oil prices .. so it is actually MUCH better business for them to keep oil prices at moderate levels, because they earn more on their investments than they would from manipulating the free market to force higher oil prices.

Venezuela wants the rest of the world to pay for Chavez's profligate waste and corruption; but in this they will find no friends .. other than little fascist Argentina with their unserviceable sovereign debt fund.
Oct 22nd, 2015 - 10:26 am 0
Chicureo
Quotas rarely are actually complied with. Sort of “honor among thieves ...”
Oct 22nd, 2015 - 11:53 am 0
ChrisR
The Arabs want to crush the American fracking oil companies and it looks like they are succeeding.

Then, and only then, maybe, the prices will go up.
Oct 22nd, 2015 - 09:05 pm 0

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