“Daesh” terror group upsets oil file on the eve of OPEC meeting

Algeria is bracing for Friday’s half annual OPEC meeting with a delegation headed by the new energy minister Salah Khebri as it will be the first test for him, after the failure of the Algeria-led initiatives during the past six months to find a solution to the price slump in the oil barrel against a backdrop of the Gulf countries’ intransigence and insistence on keeping oil production high.

The much-awaited OPEC meeting will be staged in Vienna amid numerous warnings that the terrorist organization “Daesh” could seriously disrupt the already-volatile world oil market as on the oil price is being traded as low as 35 dollars a barrel in Turkey and Syria where it controls large swathes of territory.

Economic expert, Abderrahmane Mebtoul, said in a statement to “Echorouk” that world oil markets were oversupplied by between 2 million b/d and 2.5 million b/d, a glut triggered by US shale oil production growth which had pushed out imports of light crude from Algeria, Angola and Nigeria in particular and which international producing countries had failed to anticipate.

The shale-driven glut, he said, had promoted an “involuntary price war among brother countries” that were all looking to protect their market share.

 “OPEC and non-OPEC countries did not have any early warnings of the US shale oil boom to allow to implement strategies to counter the negative effects of shale,” he further explained.

Despite the mass sell-off in global oil markets in the wake of the previous meeting in November, this week is set to be a less dramatic affair with OPEC once again widely expected to maintain their output target at the current level of 30mln bpd.

In terms of the rationale behind the decisions, oil prices have recovered from the near six-year lows seen in January and as such there is now less pressure on OPEC to cut production as the global supply glut appears to be easing. Furthermore, Russia and other non-OPEC members remain unlikely to cooperate on a production cut thus providing the cartel with no incentive to change its output quota of 30mln bpd.

These expectations also come in the back of recent comments from several OPEC delegates who have already said they expect no change to the cartel’s meeting today with Saudi Arabia’s oil minister on Monday saying that his country’s oil strategy is working and that demand is picking up and supply is slowing.