Anxiety over oil prices, as OPEC meets this week

ALL eyes are on the ministers of the Organisation of Petroleum Exporting Countries (OPEC), as they gather to determine the fate of member countries on Friday in the midst of crude price volatility.

The prevailing crude price situation has nearly cracked OPEC, as member-countries lobby to protect their various economies, which were apparently affected by the plunging oil prices.

Nigeria, Iran and Venezuela were among the OPEC-members that have been pushing for the cartel to output, but others such as Saudi Arabia and indeed the Arab bloc seems to be more comfortable with the recent prices.

However, there are indications that the cartel may not change its output quota at the June 5 Meeting, even as its substantive president, Mrs Diezani Alison Madueke may be deeply enmeshed in the intrigues of Nigeria’s political transition.

Some delegates had predicted that the cartel is likely to keep its output target unchanged because the global oil market appears to be in good shape and prices are expected to firm up from current levels.

Oil prices have rallied after falling to a near six-year low close to $45 a barrel in January due to a global glut. Brent crude settled at $65.56 on Friday, up $2.98, or 4.8 per cent.

Commenting on the all-important meeting, a Gulf delegate said: “It is unlikely that OPEC will make a decision regarding its production ceiling for two reasons: the first one that Russia and other non-OPEC producers have expressed their non-desire to cooperate in any idea of a production cut.

“And the second one is that the market is firming up. Prices are expected to continue at current levels and most likely will go higher. Demand is also strong and the inventories are balanced. The market seems to be in good shape,”

“Prices … are within $60-$65, at least they are improving from where they were at before,” another Gulf OPEC delegate said. “There is still an oversupply in the market, but the oversupply is less than what it was in November.”

OPEC refused to cut output to shore up prices at its last meeting in November despite the glut, seeking to defend market share against higher-cost producers such as the United States. It left its output target at 30 million barrels per day.