Oil States Still Divided in Pre-Summit Talks: OPEC Reality Checkby
Ministers gathered informally before policy meeting on Friday
Venezuela, Ecuador push for output cut as Saudis hold firm
OPEC members preparing to decide production policy on Friday failed to overcome differences in pre-summit talks, leaving the group divided over the need for output curbs.
The informal gathering in Vienna ended with nothing determined, ministers from the United Arab Emirates and Iraq said Thursday. There were disagreements but the meeting was fruitful, Iran’s oil minister said, while Ecuador described the talks as difficult.
Ministers are expected to decide against cutting production even as crude prices languish near a six-year low. That will leave most OPEC members unable to balance their budgets, with only Qatar able to do so if Brent crude averages $57.30 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. The North African country, which has backed Venezuela’s motion to hold a summit of OPEC and non-OPEC producers to boost prices, joined the informal discussions on Thursday.
- 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
- New Oil Minister Carlos Pareja has said Ecuador agrees with Venezuela’s proposal for a 5 percent production cut and OPEC should comply with its collective output target. He described Thursday’s meeting as difficult but said he’s optimistic about the outcome of Friday’s summit.
- Price needed: $87
- Share of OPEC production: 8.4 percent
- Iran plans to raise output by 500,000 barrels a day within a week of international sanctions being removed and by 1 million barrels a day within six months. The country wants OPEC to make room for that increase within its 30 million-barrel-a-day ceiling. Oil Minister Bijan Namdar Zanganeh said Thursday he isn’t prepared to discuss an individual quota until Iran’s production is fully restored and won’t accept any cuts that would bring its output below the pre-sanctions level of 4 million barrels a day. He called Thursday’s meeting fruitful despite differences of opinion.
- 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.
- 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. Amid calls from Venezuela and other members for a coordinated OPEC effort to reduce supply, Kuwait has backed the Saudi view that the group shouldn’t act alone to balance the market.
- 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. On Thursday he said it’s too early to say whether Nigeria will propose an output cut.
- 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. Saudi Arabia has adopted a conciliatory tone ahead of Friday’s summit, promising to listen to all OPEC members before a policy decision is made. Yet the country dismissed as “baseless” a report that it may propose an eventual 1 million-barrel-a-day cut.
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. The U.A.E., like Saudi Arabia and Kuwait, has said OPEC shouldn’t act alone to balance the market.
- Price needed: $125 (ING)
- Share of OPEC production: 7.8 percent
- Venezuela, facing an economic crisis after crude prices collapsed, has said oil may drop to the mid-$20s a barrel unless OPEC takes action. Oil Minister Eulogio del Pino will put forward a clear proposal for all member states to respect production quotas and make cuts to output that could include non-OPEC nations, Correo reported, citing President Maduro. Venezuela, with the largest oil reserves in South America, depends on crude for 95 percent of its export revenue, which is why its bond traders keep a close eye on oil prices.