The OPEC countries and other oil producers won’t be able to agree to freeze production level in the near future, just like they failed to do that during the meeting held Apr. 17 in Doha, Mikhail Krutikhin, an energy analyst at the Moscow-based RusEnergy consulting firm, told Trend Apr. 19.
The meeting of oil producing countries in Doha on the oil production freeze on Apr. 17 ended without reaching an agreement. In total, representatives of 17 countries took part in the meeting.
“There were speculations that the meeting might be a kind of ‘verbal intervention’ on the market in order to raise oil prices at least temporarily,” the expert said. “But I think this is a wrong assumption, because the participants of the meeting didn’t even sign any declaration.”
The analyst added that the main purpose of the meeting was to attract Iran to the production freeze and thereby to prevent Iranian oil from entering the markets of the OPEC oil producer countries.
For Saudi Arabia, allowing Iran to enter new markets will be a geopolitical failure in the region, Krutikhin said.
However, no solidarity on the part of OPEC should be expected while Iran intends to occupy all the possible markets, he said.
Krutikhin believes that one shouldn’t expect the next regular OPEC meetings scheduled for June and October to be productive as well, because by that time Iran won’t reach the figures of oil production and export planned by the country after the lifting of sanctions.
Therefore, it will be too early to speak about the possibility of Iran’s joining the agreement on oil production freeze, he said.
The analyst said that the prevalence of supply over demand is being gradually reduced.
Krutikhin added that one can expect some stabilization of demand and supply on the oil market in the late third quarter-early fourth quarter of 2016.
“Supplies are growing, but not very fast,” the analyst said. “First, Iran’s new oil supply to the market is restrained. Some time is required for Iran to restore old fields. Two years are required for developing new fields.”
“Saudi Arabia can accelerate oil production within several months and produce 12.5 million barrels of oil per day instead of 10-11 million barrels of oil per day,” the analyst said. But Saudi Arabia does not intend to do it because it will be too much.”
The analyst said that the oil market balance will depend on China’s economy, its demand for oil, and the work of the US companies, producing shale oil.
According to the April outlook of the US Energy Information Administration (EIA), the global oil supplies are expected to reach 96.27 million barrels of oil per day in 2016.
According to EIA, the oil consumption in the world will hit 94.86 million barrels of oil per day in 2016.
While speaking about oil price forecasts, the analyst said that it is not worth waiting for the significant rise in oil prices at least for the next two years.
“One can expect that Brent oil price will increase up to $50 per barrel by late 2016,” the analyst said. “As a result of such a small increase, I think the average level for 2016 will be within $45 per barrel.”
Brent oil price hit $43.27 per barrel April 19.