Venezuela, Ecuador to Propose Output Cuts: OPEC Reality Checkby
Venezuelan President says nation will suggest a 5% reduction
Ecuador crafts plan to improve prices with production controls
As the last of the OPEC ministers make their way to Vienna, Venezuela and Ecuador said they would seek curbs on production at Friday’s meeting in order to boost prices.
Venezuela will propose a 5 percent production cut, state newspaper Correo Del Orinoco reported, citing President Nicolas Maduro. Ecuador will suggest ways to improve oil prices through output controls, the South American nation’s oil ministry said on its Twitter account.
While the majority of OPEC members would agree to a reduction in output, Saudi Arabia and other Persian Gulf Arab countries are opposed, Shana reported Wednesday, citing Mehdi Asali, director general of OPEC and energy forums at the Iranian Ministry of Petroleum. The group needs to reach a consensus among all members before it can change its output target.
OPEC pumped 32.1 million barrels a day in November, exceeding its 30 million-barrel quota for an 18th month, according to a Bloomberg survey of companies and analysts. Iran has said it plans to pump an additional 500,000 barrels a day once international sanctions over its nuclear program are lifted.
Ministers are expected to decide against cutting production on Dec. 4 even as crude prices languish near a three-month low. That will leave most OPEC members unable to balance their budgets, with only Qatar able to do so if Brent crude averages $57.50 a barrel next year, as forecast.
Following are the latest comments from OPEC members and analysts. The respective shares of supply are based on October levels. The estimates for the price that each member needs to balance its budget are from the International Monetary Fund unless stated otherwise.
- Price needed: $96
- Share of OPEC production: 3.4 percent
- Algeria’s efforts to organize an emergency OPEC meeting in August failed to bear fruit while its calls for non-OPEC members to cut output weren’t heeded. Algeria has backed Venezuela’s motion to hold a summit of OPEC and non-OPEC producers to boost prices.
- Price needed: $90 (ING Bank data)
- Share of OPEC production: 5.6 percent
- Angola’s oil exports are heavily dependent on China. The African nation became China’s second-biggest crude supplier in October, according to customs data. Any slowdown in the Chinese economy could make the outlook for Angola’s exports more uncertain.
- Price needed: $120 (ING)
- Share of OPEC production: 1.7 percent
- President Rafael Correa has suggested that cutting OPEC’s annual output by 1.6 percent would be enough to boost prices “significantly.” New Oil Minister Carlos Pareja, who arrived in Vienna on Monday, expects crude prices to improve next year and will make proposals to facilitate this at the meeting.
- Price needed: $87
- Share of OPEC production: 8.4 percent
- Iran, OPEC’s second-biggest producer before sanctions were tightened in 2012, plans to raise output by 500,000 barrels a day within a week of restrictions being removed and by 1 million barrels a day within six months. The country, which now ranks as the fifth-largest producer, has said OPEC should make room for that increase within its ceiling of 30 million barrels a day.
- Price needed: $81
- Share of OPEC production: 13 percent
- Iraq pumped a record 4.4 million barrels a day in June and its daily production has surpassed 4 million barrels for the past six months. Together with the U.S., it’s responsible for most of the global surplus this year. That’s unlikely to persist in 2016, according to industry forecasters: Iraq is struggling with prices below $50 and is embroiled in a “costly battle” with Islamic State militants, the International Energy Agency said last month. Even its oil minister expects production growth to slow next year.
- Price needed: $67
- Share of OPEC production: 8.7 percent
- Kuwait is in the strongest position to weather a prolonged period of low oil prices thanks to its current-account surplus, according to Capital Economics Ltd. The country, along with other Persian Gulf members of OPEC, opposed Venezuela’s proposal for an oil-price summit with non-OPEC producers, the Wall Street Journal reported.
- Price needed: $269
- Share of OPEC production: 1.3 percent
- OPEC’s smallest producer, Libya has been unable to restore output to the 1.6 million barrel-a-day level it reached before the Arab Spring in 2011. Production has swung between 250,000 and 850,000 barrels a day in the past year amid an escalating conflict between the divided country’s rival governments. Libya is one of OPEC’s “Fragile Five” nations that face greater risk of significant instability and output disruptions in the current oil market, according to RBC Capital Markets Ltd.
- Price needed: $120 (ING)
- Share of OPEC production: 6.3 percent
- Nigeria’s Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu has said oil at $40 isn’t acceptable and OPEC needs to do more to enforce production quotas. The country would consider $60 a barrel more “tolerable,” he said Nov. 21.
- Price needed: $55.50
- Share of OPEC production: 2 percent
- Among OPEC, Qatar boasts the lowest fiscal break-even oil price to balance its budget. That’s still about $10 above current prices. Energy Minister Mohammed Al Sada has said there are signs of a market recovery next year as non-OPEC supply growth is set to slow.
- Price needed: $106
- Share of OPEC production: 32 percent
- Saudi Arabia has boosted output in nine of the past 11 months as OPEC’s biggest producer keeps its strategy of defending market share. The nation pumped a record 10.6 million barrels a day in July. Yet it’s not immune to the slump in prices. Despite having a war chest of $647 billion of foreign-exchange reserves, its credit rating was cut by Standard & Poor’s in October on concern the country’s reliance on energy exports for 80 percent of revenue will drive up the budget deficit.
UNITED ARAB EMIRATES
- Price needed: $73
- Share of OPEC production: 9.2 percent
- The U.A.E.’s oil minister, Suhail Al Mazrouei, said Nov. 18 that OPEC shouldn’t be considered a swing producer but rather a steady, low-cost supplier. Mazrouei also said last month he expects a “gradual correction” in prices next year.
- Price needed: $125 (ING)
- Share of OPEC production: 7.8 percent
- Venezuelan Oil Minister Eulogio del Pino will make a very clear proposal for all OPEC countries to respect production quotas and make cuts to output that could include non-OPEC nations, Correo reported citing President Maduro. Venezuela depends on crude for 95 percent of its export revenue, which is why its bond traders keep a close eye on oil prices.