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Saudis Prepared To Listen At OPEC Meeting
Submitted by Nick Cunningham via OilPrice.com,
As energy analysts closely watch for any clues emerging from Vienna, where OPEC is set to meet on December 4, global oil markets remain stubbornly oversupplied.
Last year, OPEC surprised the world by leaving its output quota untouched amid rapidly growing global supplies, a decision that sent oil prices spiraling downwards. As the group’s strategy became clear, there were fewer surprises in the follow up meeting in June 2015. This time around, however, while an about-face is not expected, given Saudi Arabia’s determination to see its course of action through, there will at least be a lot more debate and protest from fellow OPEC members.
Not all of OPEC’s member countries are as well-endowed as Saudi Arabia, and a few are facing economical and financial pressure with varying degrees of hardship. Venezuela and Libya stand out in terms of facing full-blown crises, but Iraq, Iran, Ecuador, and Nigeria are also suffering from the fiscal vice of low oil prices.
Of course, no production cut can work unless all members agree to a plan and implement it cohesively. Aside from a select few Gulf States, most of the OPEC membership is expected to heavily lobby Saudi officials to cut production.
But in reality, Saudi Arabia will be the one to determine OPEC’s next step. As the only country with significant spare capacity, not to mention cash reserves and the political wherewithal to actually impose production cuts, Saudi Arabia will decide whether or not OPEC moves to cut its output quota.
There is no indication that Saudi Arabia is ready to reverse course, but as always, a similar ritual unfolds in Vienna. Journalists rush Saudi oil minister Ali al-Naimi to see if they can pry a few clues from him, and he routinely keeps his cards close to his vchest. “We will listen, and then decide,” he said on Tuesday upon his arrival in Vienna, trying to tamp down speculation that the outcome is preordained. When asked if OPEC’s strategy of pursuing market share was working, al-Naimi was coy. “What strategy?” he said. “Who said we’re keeping market share?”
Despite al-Naimi’s assurances that the Saudi delegation won’t dictate policy to OPEC, his voice is the only one that counts.
Meanwhile, clues that Saudi Arabia is indeed fighting for market share can be found elsewhere in Europe where Saudi Arabia is discounting crude in a bid to peel away some of Russia’s customers. Saudi oil is finding its way to Sweden and Poland, for example, for the first time in years. And Saudi Arabia is seeking to store oil at a Baltic port in Gdansk, Poland, according to a report from The Wall Street Journal. As Saudi Arabia slashes prices to sell oil in Russia’s backyard, Russia has been forced to cut its own prices. The Urals marker, a benchmark for Russian crude, dropped lower than Brent crude, with the Urals discount tripling in October. The widening discount between Urals and Brent is demonstrable evidence that Saudi Arabia’s oil exports to Europe are worsening the glut and undermining Russia’s position.
The evidence suggests the battle on the supply side is far from over. In fact, crude oil inventories continue to climb around the world. In the U.S., oil storage levels have increased steadily since early September, topping off last week at 488 million barrels. That is just shy of the 80-year record storage level of 490 million barrels. And to pile a bit of bearish news onto that already pessimistic landscape, the latest monthly production data from the EIA points to a pause in output declines. Weekly EIA production estimates are not as accurate as the retrospective monthly figures, and the latest monthly numbers show that production in the U.S. declined to 9.33 million barrels per day in September, a decline of a meagre 20,000 barrels per day. At that rate it will take many more months for oil markets to balance out and for prices to rise.
Little help is expected from Vienna. Saudi officials will get an earful from their fellow OPEC members, pleading for production cuts. But with Saudi Arabia not expected to shift gears, there could be some tension over the next few days. “It will be likely a heated meeting,” an OPEC delegate from a Persian Gulf country, told The WSJ.
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Bet the Saudi Pedophile Royals are getting nervous, as their money reserves deplete much faster than expected...
Which is why His Royal Anus has told his skinny little leashed African bitch Obama to keep pretending not to find ISIS oil trucks (and wells, refineries, Turkish smugglers, etc. etc)
The Saudis only listen in between recreational beheadings.
Yeah they listen. And they even enjoy listening...
.. but only to the yanks.
http://goo.gl/7tHnDu
LOL! Whatever. the spice must flow...
Think of the bargain opportunities. When gas hits a buck a gallon, a low mileage used 2014 Tesla will sell for $4,995
UWTI. "It burst into flames! It burst into flames, and it's falling, it's crashing! Watch it, watch it! Get out of the way!"
UWTI is one sorry product (imo). It is only good for trying to time short-term bottoms lately, and it is like trying to pick up pennies in front of a steamroller. Somebody will make big money in UWTI if they can pick the absolute bottom in WTI crude, but many will lose plenty of money trying to time the WTI crude market.
"Venezuela and Libya stand out in terms of facing full-blown crises, but Iraq, Iran, Ecuador, and Nigeria are also suffering from the fiscal vice of low oil prices."
As usual, no mention of Canada. Canada... the country producing the-most-expensive-to-extract oil on the planet. Doncha think Canada feels the pain too? I assure you, we do, and more than all the countries named. When reading on ZH, it's as if Canada doesn't exist, except when the opportunity arises to do as much Canada-bashing as possible. This story did not present that opportunity. You're getting tiring on that front ZH.
Just venting... pay no attention.
Canada is not part of OPEC; article pretty directly addresses the OPEC meeting and it's implications. There are also other things Canada does, ie., while oil is a significant portion of the Canadian economy, it's a mature/multifaceted economy that could survive a downturn / eventual inevitable elimination of the use of fossil fuels for energy, whereas pretty much none of the OPEC countries are going to amount to anything post-oil.
Also, most of Canada's problems are due to real estate speculation / financialization, and a crash in this sector would actually be very healthy for Canada's economy longer term.
Yeah, I wasn't recognizing that the article was really speaking about OPEC members. I was thinking of it from the point of view of "oil producing" countries, regardless. I guess that's because we feel the pain too... regardless of whether we're a member of that funny troup of misfits or not. So my bitching was a bit out of line this time. I agree with your other points too.
You wasn't recognizing... you were thinking... Now you see why ZH ignores Canada.
Except of course, when it comes time to bash them, it, whatever. Eh? /s
I feel bad for Alberta but not for Ontario and Quebec.
Like most other countries, a good nuclear war or massive plague outbreak to wipe out the population of the cities would do a lot to fix things for the survivors.
Before, wealth could control areas, regions, then states, countries and now concentrated wealth can impact the world. A Saudi family decides what the world pays for gasoline? Other families or collective groups will soon decide the same for other needed products. Governments are becoming obsolete and ineffective.
Willing to listen? Uhh huh.
Saud is goading Iran into a confrontation. This will force the US to protect its interests and put an end to the Shia once and for all... or start WWIII, whichever comes first.
Putin whispers in Iran's ear, "Relax, they're bluffing. Wait them out, be patient. They will soon be broke."