The Organization of Petroleum Exporting Countries will hold informal talks at a conference in Algiers next month and considers the recent decline in oil prices to be temporary, the group’s president said on Monday.
“Expectation of higher crude oil demand in the third and fourth quarters of 2016, coupled with decrease in availability, is leading analysts to conclude that the current bear market is only temporary and oil price would increase during the later part of 2016,” Mohammed Al Sada, Qatar’s energy minister and holder of OPEC’s rotating presidency, said in a statement on the group’s website, World Oil reported.
"Members constantly discuss ways to stabilize the market," he said.
Oil tumbled into a bear market last week, ending a recovery that saw prices almost double from a 12-year low in February. The renewed decline keeps pressure on many member countries that are still unable to balance their budgets. OPEC ministers last met in June when they rejected a proposal to adopt a new output ceiling, sticking to a policy of unfettered production.
According to Robin Mills, CEO of consultancy Qamaar Energy, Sada’s comments indicate the group is concerned by the drop in prices and may consider action if the market does not stabilize at a higher level.
“If they’re going to talk about anything that’s worth announcing to the market, it would have to be an idea like the previously proposed freeze in oil production,” Mills said by phone from Dubai.
"Iran will probably raise production back to pre-sanctions levels by the end of the year, while Saudi Arabia will also be selling more crude as domestic use of fuel during the country’s summer months slows."
"Iran is pumping about 3.8 million barrels per day and exporting about 2 million of that," Mohsen Ghamsari, director of international affairs at National Iranian Oil Company, said in an interview in Tehran last month.
"That has allowed it to get back to about 80% of the market share it had before the restrictions."
Sada noted that the latest drop in prices will not last.
"The recent slide in prices reflects weaker refining margins, a surplus of refined products, plus the UK’s vote to leave the European Union and its impact on the financial markets," he said.
