- Proposed meeting to include non-OPEC countries such as Russia
- Venezuela-Saudi Arabia relations `excellent,' Rodriguez says
Venezuelan proposals for a summit between OPEC and non-OPEC producers are advancing, and should focus on bolstering oil prices rather than limiting volumes, government officials said Tuesday.
The country seeks a fair price for oil that will support economic growth and energy demand, Oil Minister Eulogio Del Pino said in an interview at Tuesday’s meeting between Venezuelan and Saudi Arabian officials in Caracas. The oil price floor Venezuela is suggesting would be analyzed every quarter, he said.
“The minimum, minimum price should be $70,” Venezuelan President Nicolas Maduro said Tuesday night from Caracas during his weekly program broadcast on state television. “Oil at $70 a barrel guarantees investments needed for global energy and economic stability.”
The Organization of Petroleum Exporting Countries has been urged by Venezuela and some other members to take action after the group decided last November not to reduce output. Saudi Arabia led OPEC’s decision to compete for market share against U.S. shale producers rather than support prices. Oil in New York and London reached six-year lows last month amid excess global supply.
“They are certainly motivated to try and put something together -- something that limits production, raises prices and helps Venezuelan finances,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “They have been floating these trial balloons for a while.”
A Saudi Arabian delegation headed by Tawfiq Bin Fawzan Al Rabiah, the kingdom’s commerce minister, and Abdullah Bin Abdullah Al Obaid, vice minister of foreign relations, met with Venezuelan counterparts for a second day in Caracas. Relations between the two countries are excellent, Foreign Minister Delcy Rodriguez said after the talks.
Brent crude, the benchmark for more than half the world’s oil, would need to climb to $89 a barrel for Venezuela to balance its budget, Robert Burgess, a London-based analyst for Deutsche Bank AG, said in a May report. Brent for November delivery rose 95 cents, or 2 percent, to $48.70 a barrel at 10:39 a.m. New York time on the London-based ICE Futures Europe exchange.
"I can see the Saudis giving the Venezuelans permission to pursue this idea, without pushing it themselves," Evans said. "A major hurdle is that non-OPEC countries might not be interested in such a meeting after already cutting their expenditures and making other moves. They probably feel they’ve already made their contribution."
Maduro said he and Russian President Vladimir Putin agreed to "several initiatives" to balance the market while meeting in China on Sept. 3, according to Venezuela’s state-news agency AVN. Maduro and Putin ”didn’t discuss any concrete steps” on oil prices, Putin spokesman Dmitry Peskov said.
OPEC is not the only actor in producing oil, said Del Pino, who also serves as the president of Venezuela’s state oil company Petroleos de Venezuela SA. There are other actors outside of OPEC that must be taken into consideration, he said.
“Our average production cost is less than $10 per barrel and if we go to a price war, it is obvious that the low-cost countries will have certain levels of gains, but we recognize that low-cost producers can’t fill the void in worldwide production of oil,” Del Pino said. “That’s why we are planning these summits.”