The replacement of Saudi Arabia’s long standing oil minister has
added more near-term uncertainty and has raised the importance of the
Organization of the Petroleum Exporting Countries (OPEC) meeting,
according to Chris Weafer, senior partner at Moscow-based consultancy
Macro Advisory.
Saudi Arabiadismissed Ali al-Naimi on May 7 as the OPEC kingpin struggles hit by falling oil prices.
Naimi, who will be succeeded by as Saudi Aramco Chairman Khalid
al-Falih has been against lowering Saudi Arabia’s production to boost
oil prices.
Weafer wrote in a note to investors on May 9 that traders have
switched attention to the June OPEC meeting that the market will expect
to get greater clarity about Saudi Arabia’s intentions and any changes
to its strategy.
“The replacement of Ali Naimi also kills any prospect of a production
freeze deal with Russia. It is known that Crown Prince Mohammed, who
now effectively controls the oil industry and oversees oil policy, was
opposed to any deal if Iran was not made part of it. Tehran has made its
position very clear and will not participate in any deal, which limits
its ability to restore oil production,” Weafer wrote.
In April, Saudi Arabia saw a decline in output by 20,000 barrels per
day to 10.18 million barrels per day due to field maintenance as OPEC’s
largest producer temporarily cut volumes of its major export grade, Arab
Heavy, S&P Global Platts analysts said on May 11.
Saudi Arabia has around 2 million barrels per day in spare capacity
and analysts suggest that production could easily be increased slightly
at other fields to make up the shortfall. This was the first time this
year that Saudi production has fallen and comes after the kingdom seemed
to make an 11th hour move to pull the plug on the Doha freeze plan,
S&P Global Platts said.
OPEC oil production soared by 140,000 barrels per day to 32.52
million barrels per day in April as Iran and Iraq ramped up production
by a hefty 150,000 barrels per day each, according to the latest survey
of OPEC and oil industry officials and analysts by S&P Global
Platts.
“Iran and Iraq’s hefty production increases fly in the face of the
failed Doha production freeze talks,” said Paul Hickin, associate
editorial director, S&P Global Platts. “The question is how much
higher can and will they go before production plateaus, because that
would make a resurrection of a freeze plan at the June OPEC meeting more
plausible.”
This rise occurred after OPEC and non-OPEC producers failed to agree
on a proposal to freeze output in Doha on April 17 in a bid to stabilise
prices.
Iraq’s output in April rose to 4.31 million barrels per day, with production recovering after falling from its January high.
https://www.neweurope.eu/article/eyes-june-opec-meeting/