- Development & Aid
- Economy & Trade
- Human Rights
- Global Governance
- Civil Society
Monday, September 26, 2022
CARACAS, Aug 26 1998 (IPS) - Saudi Arabia, Mexico and Venezuela postponed the meeting they had scheduled for Friday, with the hope that oil prices would rally by the end of the month, Venezuelan Energy Minister Erwin Arrieta confirmed Wednesday.
Arrieta and his Mexican counterpart Luis Tellez still plan to meet Friday in Mexico City, but on an informal basis and without the presence of Saudi Oil Minister Ali Al-Naimi, the Venezuelan minister said in the presidential palace of Miraflores.
The markets responded with calm to the news of the postponement of the meeting between the members of the Riyadh Pact, which since Mar. 22 has brought about two voluntary cutbacks in production by the 11 Organisation of Petroleum Exporting Countries (OPEC) members and independent producers.
Arrieta reported that prices were showing signs of a rebound, and that the seven-oil OPEC benchmark basket stood at 12.17 dollars a barrel Wednesday, 33 cents above last Friday’s closing price and not far from the year’s average of 12.64 dollars.
In 1997 the OPEC benchmark was worth an average 18.68 dollars a barrel, and 20.29 dollars in 1996 – two prices that indicate the depth of the current slump.
Arrieta denied that the meeting to be held in Mexico City had been put off due to any disagreement with Al-Naimi regarding the objectives of the gathering. The Mexican daily ‘Reforma’ reported Wednesday that the postponement was the result of the Saudi minister’s difficult agenda. According to Arrieta, the new meeting will be held in early September.
The meeting between the ministers of Latin America’s two major oil exporters was explained as just another tete-a-tete along the lines of others held by Arrieta and Tellez since March, the latest of which took place early this month in Caracas.
A communique released by the Mexican Secretariat of Energy coincided with Arrieta’s explanation of the decision to postpone the meeting. According to the press release, the members of the Riyadh Pact are in need of “further elements, to enable a more precise assessment of the evolution of the international oil market.”
This year oil prices crashed to the lowest level seen since 1986. And the decline continued this month, when the market was expected to react to the second cutback, implemented since July.
The persistence and expansion of the Asian crisis, one of the mildest winters this century in the industrialised North, permission for Iraq to step up production and undisciplined overproduction by exporters during the first quarter all combined to saturate the market.
Demand currently stands at around 75 million barrels per day (bpd). Fourteen months ago, forecasts put this year’s demand at 76.4 million bpd, which led OPEC to raise global production to 27.5 million bpd at a conference held last November in Jakarta.
That rise was the start of a year of slumping prices, exacerbated by the generalised lack of discipline among OPEC members, and top capacity production by all exporters.
When the three ministers met secretly on Mar. 22 in Riyadh, in an initiative sponsored by Algeria within OPEC and Mexico as independent producer, the organisation’s members were producing 28.7 million bpd.
The Riyadh meeting led to a withdrawal of 1.7 million bpd from the market since April. The second cutback agreed on in July raised the total to be withdrawn from the market to 3.1 million bpd. The silencing of the drills was to be gradual in order to avoid damage to the wells, but the process of reducing production has slowed down in many producers – while others have not even started, according to a number of sources.
Assessments by producer countries and independent market supervisors indicate that in practice, no more than two million bpd have been withdrawn from the market.
Analysts say the scarce interest in implementing the cutbacks since July has been due to the failure of prices to rally in spite of the effort.
Consumers, meanwhile, continue to enjoy their dominion over a market flooded with the highest level of stocks in history, equivalent to 95 to 107 days of consumption.
OPEC will see its revenues fall 50.7 billion dollars this year, with Venezuela accounting for 10 percent of the losses. And producers with the highest operating costs no longer find it profitable to keep their wells functioning.
IPS is an international communication institution with a global news agency at its core,
raising the voices of the South
and civil society on issues of development, globalisation, human rights and the environment
Copyright © 2022 IPS-Inter Press Service. All rights reserved. - Terms & Conditions
You have the Power to Make a Difference
Would you consider a $20.00 contribution today that will help to keep the IPS news wire active? Your contribution will make a huge difference.