Oil States to Keep Status Quo as Price Gains: OPEC Reality Check

  • Saudi policy to force out high-cost suppliers is bearing fruit
  • Group may decide who will replace Secretary-General El-Badri

Oil Is Set for Longest Run of Gains in 5 Years

OPEC members gathering in Vienna on June 2 are expected to fall in with a Saudi Arabia-led policy focused on squeezing out rivals as oil’s recovery shows the strategy is working.

Since deciding in 2014 to maintain output amid sliding prices, the Organization of Petroleum Exporting Countries has managed to force out some high-cost producers, easing the supply glut and spurring an 85 percent rally in crude since January. 

Oil is now set for the longest run of monthly gains in five years as declining production from North America to Nigeria drives prices toward $50 a barrel.

All but one of 27 analysts surveyed by Bloomberg said OPEC will stick with its current strategy. That means Thursday’s meeting may be less fraught than the last summit in December, which ended with public criticism of the Saudi position from Venezuela and Iran. An alternative proposal -- to freeze output -- was rejected at talks in Doha last month.

The group may also choose a secretary-general to replace Abdalla El-Badri, whose term was extended in December after members failed to agree on a successor. In recent months three new hopefuls have emerged to try and break the impasse: Nigeria’s Mohammed Barkindo, Indonesia’s Mahendra Siregar and Venezuela’s Ali Rodriguez.

For an explanation of how OPEC will choose its new chief, click here.

Following are the latest comments from OPEC members and analysts. The respective shares of supply are based on April levels. Estimates for the price each member needs to balance its budget are from the International Monetary Fund unless stated otherwise.


  • Price needed: $87.60
  • Share of OPEC production: 3.3 percent
  • Algeria tried, and failed, last year to organize a meeting of non-OPEC/OPEC members to push for output cuts, as years of declining crude production and low prices weighed on its fiscal deficit. A freeze by producers is needed immediately to stabilize prices, Salah Khebri, minister of energy and mines, said in an interview mid-May. “Our main message to the next OPEC meeting is that it needs to restore unity and work for the benefit of all members collectively,” he said.


  • Price needed: $93.14 (RBC Capital Markets)
  • Share of OPEC production: 5.4 percent
  • Angola is seeking an IMF loan as state revenue plunges. Its over-reliance on strong oil prices leaves savings and inward investment ‘‘highly vulnerable’’ to swings in the global economy, Fitch unit BMI Research said in an e-mailed report.


  • Price needed: $75.16 (RBC Capital Markets)
  • Share of OPEC production: 1.7 percent
  • Ecuador supported an oil-output freeze at the Doha meeting. Minister Jose Icaza met with his Venezuelan counterpart before the summit to discuss prices and seek to agree on a unified position. Icaza became Ecuador’s new oil minister in early May following the resignation of Carlos Pareja.


  • Unlike other OPEC members, Indonesia is still a net oil importer so the fiscal break-even concept is not applicable.
  • Share of OPEC production: 2.2%
  • Indonesia rejoined OPEC at the Dec. 4 meeting, seven years after suspending its membership. It will stick to its plan to increase oil output this year even if some of the world’s biggest producers move to cap volumes, Energy and Mineral Resources Minister Sudirman Said said in February.


  • Price needed: $61.50
  • Share of OPEC production: 11 percent
  • The Persian Gulf nation is rebuilding its energy industry and restoring crude sales after international restrictions were lifted in January. Exports are already at 2 million barrels a day, just short of pre-sanctions levels, the IEA said in a recent oil-market report. The head of the state oil company said the country -- a key advocate of output restraint in previous years -- has no plans to join any output freeze as it remains focused on restoring exports.


  • Price needed: $59.70
  • Share of OPEC production: 13 percent
  • Production has jumped more than 40 percent since mid-2014 and exports are at near-record levels. But plunging government revenue is hampering the state’s ability to invest, and OPEC’s second-biggest crude producer is reaching the limits of its capacity to store and export oil, according to analysts at Energy Aspects Ltd. and FGE. Oil Minister Adel Abdul Mahdi suspended his participation in the cabinet in March amid ongoing political turmoil, and his duties are being carried out by Deputy Oil Minister Fayyad Al-Nima.


  • Price needed: $52.10
  • Share of OPEC production: 8.7 percent
  • Kuwait plans to boost oil production to more than 3 million barrels a day within months, doubling output from where it stood during April’s oil-worker strike. Acting Oil Minister Anas Al-Saleh said May 18 that OPEC’s policy “has been working well.”


  • Price needed: $195.20
  • Share of OPEC production: 0.9 percent
  • Libya is OPEC’s smallest producer. Competing administrations of the state-run National Oil Corp. in the east and west of the divided country agreed May 17 to resume exports from Hariga port to help revive production, which has dropped 80 percent since the 2011 uprising that ousted Muammar Qaddafi. Armed militias compete for control of oil facilities. This week the Petroleum Facilities Guard said it captured a town near the oil port of Es Sider following clashes with Islamic State militants. It isn’t clear if Libya will send anyone to the Vienna meeting; it didn’t attend the Doha talks in April.


  • Price needed: $104.49 (RBC Capital Markets)
  • Share of OPEC production: 5.1 percent
  • A resurgence in militant attacks in Nigeria’s oil-producing region has cut output to the lowest in 27 years, helping buoy global prices. An armed group calling itself the Niger Delta Avengers has warned of more attacks to come.


  • Price needed: $52.40
  • Share of OPEC production: 2 percent
  • Mohammed Al Sada, Qatar’s minister of energy and industry who is also president of OPEC, has said global demand is catching up with supply and the market should see a “re-balancing” in the second half of the year as cheaper crude has forced some production to close. Qatar is expected to swing into a budget deficit this year, according to the IMF.


  • Price needed: $66.70
  • Share of OPEC production: 31 percent
  • Saudi Arabia will probably keep producing crude at near-record levels under new Energy Minister Khalid Al-Falih, an ally of Deputy Crown Prince Mohammed bin Salman. Prince Mohammed scuppered the oil-freeze plan, and Al-Falih’s appointment points to an “exceedingly high probability that there will be no Saudi agreement to freeze let alone cut production,” analysts including Ed Morse of Citigroup Inc. said in a May 9 note.


  • Price needed: $71.80
  • Share of OPEC production: 8.9 percent
  • U.A.E. still supports stability in the oil market, Matar al Neyadi, the undersecretary of the energy ministry, said in April. Abu Dhabi National Oil Co.’s director of marketing and refining, Abdulla Salem Al Dhaheri, has said he expects the market to balance in the second half.


  • Price needed: $121.06 (RBC Capital Markets)
  • Share of OPEC production: 7.4 percent
  • Venezuela is one of the so-called Fragile Five OPEC members most at risk from significant instability amid the turmoil in prices, according to RBC Capital Markets LLC. Energy Minister Eulogio Del Pino was one of the most ardent advocates of the failed production-freeze agreement. While the country’s economy remains in a critical condition, Caracas is probably resigned to the course set by Riyadh, said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University in New York.
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