by Bloomberg
James Herron and Rakteem Katakey
Friday, September 21, 2018
OPEC and its allies seem poised for another contentious meeting in Algeria this weekend.
(Bloomberg) — OPEC and its allies seem poised for another contentious meeting in Algeria this weekend as Iran — wounded by U.S. sanctions — cries betrayal and threatens to veto decisions.
Yet none of this really matters for the oil market.
Squabbles over “violations” of the supply deal, or debates about how to measure compliance rates, are largely background noise. That’s because Saudi Arabia and Russia — the group’s two largest producers — have already moved beyond the 2016 deal to cut output, and U.S. President Donald Trump is pushing them to do even more.
“It’s likely to be a meeting high on politics and low on decisions,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S. “The producers that count are producing at will” and Saudi Arabia and Russia are likely to boost output further, he said.
This much is evident in daily oil flows. Both countries had already starting ramping up shipments in May, one month before the Organization of Petroleum Exporting Countries and its allies agreed to ease their cuts. The extra 1 million barrels a day of supply pledged in June was supposed to be allocated by the committee that meets this weekend in Algiers, but neither country has waited for the results of its deliberations.
Russia has fully rolled back its cuts then added some more oil, taking production to a new post-Soviet record. Saudi Arabia hasn’t yet fulfilled its pledge to lift output to an all-time high, but the kingdom has still added almost half a million barrels to daily supply since May.
This is a violation of the agreement forged in June, according to Iranian Oil Minister Bijan Namdar Zanganeh, who told reporters in Tehran this week that some members are “siding with the U.S.” to carry out “anti-Iranian policies.”
His protests rest on differing interpretations of the convoluted and confounding text that emerged from the group’s last ministerial meeting in Vienna. Did that agreement allow other members to offset supply losses from Iran and Venezuela — as the Saudis argue — or did it merely reiterate that each country should pump in line with its individual target — Iran’s position
Source: Rigzone.com
Energy Network 