OPEC to Discuss Price Issues

OPEC to Discuss Price IssuesOPEC to Discuss Price Issues

The technical meeting of oil experts from OPEC and non-OPEC countries to be held on October 21 in Vienna, Austria, will explore avenues of raising oil price in global markets, said the director for OPEC affairs at Iran's Oil Ministry.

"The consultative meeting will discuss Venezuela's proposal, but no decisions will be made," Mehdi Asali told Shana on Sunday.

Venezuelan Oil Minister Eulogio del Pino said on Tuesday that eight non-OPEC countries have been invited to the meeting, namely Azerbaijan, Brazil, Colombia, Kazakhstan, Norway, Mexico, Oman and Russia.

Venezuela, whose economy has been decimated by low oil prices, plans to propose a return to the old mechanism of progressive production cuts to control prices, with a first floor of $70 per barrel and an upper target of $100 per barrel.

The Organization of Petroleum Exporting Countries, of which Saudi Arabia is the largest producer, decided in December and again in June to keep its production target unchanged at 30 million barrels a day. The group has exceeded this official target every month since May 2014.

"The excessive supply has caused oil prices to fall sharply and a production decline could help alleviate the situation," Asali said.

This is while major oil producers have so far failed to take any action to cut production since October 2014 and appear unlikely to do so any time soon.

Although they have different reasons to continue high output, the US, Russia and Saudi Arabia are stockpiling the product since no hike in demand is expected. In addition, the inevitable return of Iran and Libya, and the prospects of the 2 million bpd excess production will not help improve the state of affairs.

Brent Crude fell from more than $100 a barrel in July 2014 to less than half that amount six months later and is now trading at around $50 a barrel.

Since 2011, OPEC has met just twice a year. It gathered more often to deal with previous price collapses and held as many as eight meetings annually in the early 2000s, sometimes convening gatherings within days' notice to convince oil majors to cut down on production. However, this has not been the case recently, as Saudi Arabia has refused to let go its market share.

OPEC also convenes a consultative meeting at the request of its president, in addition to the extraordinary meeting. The last one took place in late 2008, when prices had collapsed due to the financial crisis and OPEC made its record output cut.

The organization next gathers for the 168th summit on December 4 at its secretariat in Vienna.