OPEC Concerned By The Failing Oil Prices
Organization of the Petroleum Exporting Countries (OPEC) is worried about the recent drop in oil prices and have said that they are ready to talk to other producers about it. The Saudi led group have kept production in vast supply, even as prices have dropped dramatically, in order to maintain high market share.
Although oil prices were trading near multi-year lows, its prices rose by nearly 9% on Monday, capping a three-day rally in which the commodity rose a total of more than 27 percent. This being due to US oil production showing output falling as well as OPEC decision to talk to other producers.
Brent was up $3.70, or 7.4 percent, at $53.80 a barrel. The U.S. domestic crude oil production peaked at just above 9.6 million barrels per day (bpd) in April before falling by more than 300,000 bpd over the following two months, Energy Information Administration (EIA) data showed Monday.
“Today’s continuing pressure on prices, brought about by higher crude production, coupled with market speculation, remains a cause for concern for OPEC and its members—indeed for all stakeholders in the industry,” the commentary in the latest OPEC Bulletin said.
The OPEC commentary went on to say that “OPEC, as always, will continue to do all in its power to create the right enabling environment for the oil market to achieve equilibrium with fair and reasonable prices.”
“As the Organization has stressed on numerous occasions, it stands ready to talk to all other producers. But this has to be on a level playing field. OPEC will protect its own interests.”
On a similar note, Russian President Vladimir Putin and his Venezuelan counterpart Nicolas Maduro will discuss “possible mutual steps” to stabilize global oil prices during a visit to China this week, a Kremlin aide said on Monday.
It is thought that Russia will discuss a cooperation with OPEC, however no major details were revealed. Russia are extremely worried about the drop in oil pries as the prices have halved since last year to trade below $50 per barrel, thus send the Russian economy into recession.
Russia, one of the world’s leading oil producers, is not a member of OPEC. Moscow and the cartel have so far refrained from trying to prop up production by cutting prices.