An oil watcher said that it is “striking” that Iraq has made negative comments about OPEC + production quotas ahead of a coalition meeting this week.
The group is expected to consider production delays starting on Monday in its two-day meeting starting in January 2021.
“A couple of weeks ago, we were all thinking it was going to be a regular routine meeting, it seemed that all the ducks lined up in a row for a rollover of these …” Herman Wang, S&G Global Platts he said. Managing Editor of Middle East and OPEC. “But now, we are seeing some cracks in the foundation,” he said.
“We know that Iraq has been struggling with their quota for a long time, but they are saying they are tired of a one-size-fits-all approach, that is quite striking, for them about managing OPEC Something to say, “he told CNBC. Rajdhani Connection “on Monday.
Wang said it is not uncommon to have some “performance theater” ahead of such meetings, but “the strings of some of these calls” were surprising.
“Too much dissatisfaction, too much fatigue among the members who have kept these cuts for so long because of Kovid,” he said. “And with these vaccines probably around the corner, some of these countries probably aren’t ready to play ball for much longer.”
Oil Pumping Jack, also known as “Nodding Donkeys”, on Friday, Nov 20, 2020, at Oilfield, a Rosneft oil company near the village of Sokolovka in the Republic of Udimert, Russia.
Andrey Rudakov | Bloomberg Getty Images
He referred to reports about the OPEC’s kingpin Saudi Arabia’s “longtime ally” the United Arab Emirates, potentially leaving the group.
Asked whether it was a real threat or merely a negotiation tool, Wang said it was a bit of both. “There’s no imminent division, I don’t think, based on what I’m hearing,” he said.
In a Reuters statement, UAE Energy Minister Suhail al-Mazroi said the country is a “trusted” member of the coalition.
Nevertheless, tough questions are being asked about the future of OPEC. “That’s partly what makes these negotiations so controversial. It’s not just about the next three months, it’s really about the rest of the decade,” Wang said.
The UAE has ambitious production targets and does not want to be limited by OPEC + output cuts, he said, adding that the question now is whether other members want to maintain the coalition.
“There is a case to be made for Saudi Arabia – they want higher oil prices, they see the need for collective action,” Wang said. “Russia sees an advantage in maintaining these relations with OPEC + and keeping these oil prices supported in the here and now. That is still the case since 6 months ago, I don’t know.”
“I think these are difficult questions that need to be asked, some discussions that are going on,” he said. “It’s really giving these things color and something we’re seeing.”