OPEC discord raises questions about its long-term future, analysts say

OPEC discord raises questions about its long-term future, analysts say

The future of OPEC looks increasingly uncertain, energy analysts told CNBC Friday, citing a deepening rift among the 14-member group.

OPEC and non-OPEC partners, sometimes referred to as OPEC+, have gathered in Vienna, Austria to decide the next phase of their oil production policy.

Led by Saudi Arabia, the oil cartel agreed in principle on Thursday to cut production by an additional 500,000 barrels per day (b/d) through to the end of March 2020, according to CNBC sources.

But it was initially unclear whether OPEC members had secured a deal, following an acrimonious meeting that ran late into the evening.

Herman Wang, OPEC and Middle East specialist at S&P Global Platts, said Thursday’s meeting had caused him to question the long-term future of OPEC.

Speaking to CNBC’s Dan Murphy in Vienna on Friday, Wang said: “What we saw last night was not a unified OPEC. Is this the beginning of the end?”

Wang highlighted several issues that suggested a cause for concern, including Ecuador’s decision to quit the group at the end of the year, media reports of Angola’s delegate walking out of the OPEC meeting, Iraq consistently over-producing its quota and a strained relationship between OPEC kingpin Saudi Arabia and non-OPEC leader, Russia.

“It’s all about the unity of OPEC. Can they hold this coalition together to keep oil prices from falling?” he added.

‘Stresses and strains’

Founded in 1960, OPEC currently has 14 members — five in the Middle East, seven in Africa and two in South America.

Saudi Arabia has long been the de-facto leader of the group, reportedly accounting for roughly one-third of the group’s total crude production.

Ecuador, the smallest member of OPEC, is scheduled to leave the organization on Jan. 1, 2020. Its departure comes exactly one year after Qatar terminated its OPEC membership.

“I think it’s quite symbolic that OPEC+ had to at least postpone their celebratory boat trip last night,” David Fyfe, chief economist at price reporting news agency Argus Media, told CNBC on Friday.

“You are beginning to see stresses and strains in this relationship,” he said, before adding OPEC+ was now faced with a “very challenging” two-to-three-year period.

When asked whether he was implying that the group could soon split, he replied: “It can never be completely discounted.”

“Let’s wait and see what they deliver today and whether they deliver upon it in the first quarter (of next year).”

Source link

قالب وردپرس

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top