Consultations with Algerian officials can help stop oil prices from declining further, First Vice President Es'haq Jahangiri said.
Before leaving Tehran for Algiers on a two-day official visit on Wednesday, Jahangiri said, "We are hopeful of adopting new policies in talks with Algeria as OPEC’s largest African member country to reverse the current downward trend in oil prices."
According to Jahangiri, expansion of ties with not only neighboring states but also African countries tops Iran's economic agenda, for which conducting regular oil consultations are necessary to help restore stability to the market, Shana reported.
The oil and gas sector is the backbone of the economy in Algeria, accounting for about 35 % of the gross domestic product and two-thirds of total exports. The country’s other natural resources include iron ore, phosphates, uranium and lead.
OPEC raised crude production to the highest in more than three years in November and scrapped its output ceiling at a December 4 meeting as it pressed on with a strategy to protect market share and pressure competing producers. Brent Crude, a benchmark for most of the world’s oil, has fallen about 14% this month.
WTI for January delivery dropped as much as 62 cents to $36.73 a barrel on the New York Mercantile Exchange and was at $36.97 at 8 a.m. in London. The contract climbed $1.04 to $37.35 on Wednesday. The volume of all futures traded was about 45% above the 100-day average. Prices are down 31% this year, set for a second annual loss.
Brent for February settlement slid as much as 58 cents, or 1.5%, to $38.15 a barrel on the London-based ICE Futures Europe exchange. The January contract, which expires on Wednesday, was 40 cents lower at $38.05.
Analysts believe OPEC’s strategy of pushing prices lower is to increase demand and reduce non-OPEC supply growth.
China, the world’s biggest energy consumer, is now signaling to OPEC members “that pricing is now too low and they will gain incrementally less in terms of demand growth from further cuts in prices.”
China’s decision to suspend fuel price cuts as crude continues its decline is sending a signal to the Organization of Petroleum Exporting Countries that prices are too low, according to a report from Sanford C. Bernstein & Co. The move gives oil a price floor around $38, according to the analysts.
The country’s decision not to cut refined product (gasoline, diesel) prices sends a signal to OPEC that its largest customer, China, believes that oil prices are too cheap.
The price of OPEC basket of 12 crudes stood at $32.61 a barrel on Wednesday, compared with $32.60 the previous day, according to OPEC Secretariat calculations.
