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All members of the OPEC countries should participate in the meeting, with the exception of Libya. They will be joined by four countries outside the organization: Oman, an old fellow cartel but also Colombia, Azerbaijan, and especially Russia, one of the two main producing countries in the world.
oil specialists remain very doubtful about the real impact of the Doha summit. Not so sure pounce courses. If that fails, it might even cause them to relapse. For many analysts, the expected rebalancing of the market should come from within the countries in Doha that those who are not.
- An effective meeting before to stand
“the summit, indeed, may have already borne fruit principal” found Erasmo Rodriguez, analyst at credit Union private (UBP). The preliminary agreement, signed on February 16 between Russia, Saudi Arabia, Venezuela and Qatar to temporarily freeze production and the prospect of a wider agreement to eventually have already helped to restart prices the rise. Since their low point of the beginning of the year, the price of black gold have returned more than 50%. A barrel of WTI, the US crude benchmark, reached 40.36 dollars Friday, April 15, against $ 26 on 11 February. The European Brent barrel, he closed the week at 43.10 dollars, almost its highest level since the beginning of the year
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in November 2014, OPEC decided to increase production in order to defend its market share, even pass up the price. This strategy actually hurts a lot to producers who have the highest costs, especially in the US and Canada. They were forced to close wells and curb their investments as ever. Western companies have all had to go into emergency restructuring plans.
But this policy also hurts its initiators. Even at current prices, more remunerative than the dead of winter, the Middle East struggle to cover their expenses. With their agreement in February, Saudi Arabia, leader of OPEC, and Russia had sent a clear signal: the price war has become too painful for all belligerents, it’s time to end it. It is this policy change, already taken into account by the markets, which must be confirmed in Doha.
- A little binding agreement
Despite the violence of the oil crisis of recent months, the concerted action that is emerging is relatively modest. There is no question of lowering the production of each State, but to maintain its historically high levels, in January. Apart from Iran and Saudi Arabia, no country seems somehow able to produce more. Moreover, no mechanism seems designed to ensure that the commitments will be required either to punish states that cheat. Everything rests on the floor and the goodwill of each other. In 2001, at the latest agreement between OPEC and external partners, such as Russia, Mexico, Oman and Norway, the promises had not been implemented. The following months, Moscow had even increased its production! The story of oil is full of episodes where participants in a cartel wanted to benefit from the efforts of others without paying the price themselves
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Despite the good will displayed, it does not say that all states agree to commit. The most sensitive is the case of Iran. Since the lifting in January of international sanctions which hindered the country continues to increase its production and would like to regain his place in the oil market before the ban. This growing power is not to the liking of Saudi Arabia. “The Saudis agree that Iran produces 500,000 barrels a day more, but not 1 million or more, as would Tehran decrypts a familiar OPEC. Beyond oil, Saudi wants to prevent Iran from taking first place in the region. “
For weeks, the Saudis say they will limit their production if Iran did the same. “Ridiculous,” has met Iran. Mohammad Bin Salman Al Saud, Crown Deputy prince in charge of oil policy of the Kingdom, therefore repeated on Friday message on a more threatening: “If the main producers do not freeze all their production, we will freeze only by our own, and we will sell our oil as much as we can. “
Under these conditions, failure is not impossible to Doha. “If this is the case, the barrel may drop very low,” dreads the boss of a European company. He could return to 30 or 33 dollars, according to Saxo Bank. Thursday and Friday, prices have already started to decline.
- A rebalancing underway
“This will happen in Doha is a priori does not change the actual balance between supply and demand, “ judge Rodriguez, UBP. Like many analysts, he believes that rebalancing the market will come primarily from countries not the summit. This is what shows the monthly report published on 14 April by the International Energy Agency (IEA).
On the demand side, the OECD agency table for 2016 growth of world consumption of about 1.2%, or 1.2 million barrels per day. Growth driven by China and, increasingly, India. Everywhere in the world, the low prices also encourage motorists and truckers to drive more. On the supply side, the United States, largest producer in the world, have significantly tightened the valves. In eighteen months, 78% of drilling platforms were arrested there! The production also declines in other countries, such as Nigeria.
In all, if Iran does not turn, the excess current production should subside over the months, and “the market seems to be closer party balance in the second half,” IEA estimates. This should bring prices to continue their ascent. A fundamental movement that symbolic decisions taken at Doha will amplify, or otherwise curb.
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