These Are OPEC's Scenarios In Algiers Meeting

Informal meeting of the “OPEC” is considering tomorrow in Algiers, several options and scenarios to reduce, freeze or increase the oil production or redistribute the quotas, with the granting of special privileges for Nigeria, Iran and Libya, in order to be able to absorb the excess of oil in the market, which reached one million barrels, in order to raise prices between $ 50 and $ 60 a barrel.

Chairman and former General Manager of Sonatrach, Abdelmadjid Attar, told Echorouk that the scenario of reducing production is not expected for tomorrow, in light of the political differences among the OPEC countries, and it comes primarily to Saudi Arabia and Iran.

“Increasing production or freezing it may be realized in a period of 3 or 6 months or even a full year, and if the roofing option will adopted, which is the optimal solution, this will suffice to absorb the excess of supplying the oil market, which becomes the equivalent of one million barrels today. Iran must be convinced of the need of sufficiency by 3.6 million barrels and that it does not aspire to reach 4.1 million barrels, because such a decision does not serve the interests of any party’.

“All the nations are affected, which gives the mandatory characters to the decisions that were taken in Algeria. A barrel of oil if it will fall below $ 40, it would be a great danger for the producing countries, including Algeria, as the barrel of oil will not rise to about $ 60, so as not to cause a new glut by the United States, through the shale gas production. Medium solutions and acceptance with minimal losses, is what will be discussed by the OPEC tomorrow”.

“I think that oil price will gradually increase after Algeria meeting from $ 46 to $ 50, to reach in a matter of a year to about $ 60. An agreement should be signed to control mechanisms via the creation of a committee that is charged with monitoring the respect of members for the production quotas, and Russia as well, which agreed in principle to the proposal of roofing production during the bilateral meetings with a number of parties including Algeria”.

On the other hand, Saudi Arabia is studying, since last August, as reported by local media on Monday, an in-depth update on the global oil market, to develop scenarios that allow the return of balance between supply and demand, and the removal of excess of supply.

Media reports said that a Saudi technical team presented at a meeting in Vienna an offer to an Iranian technical officer, in the presence of representatives of Algeria and Qatar in the “OPEC”, and the Secretary General of the Organization, Mohammad Barkindo, to reduce production in Saudi Arabia, which reached in August 10.6 million barrels a day to 10.1 million, which is the Saudi oil production level of last January.

Besides reducing it by 4%, which is distributed relatively on the of production Emirates, Kuwait and other countries, and the exclusion of Iran, Nigeria and Libya to be able to produce with its present capacity, and this is formula that can remove the surplus in the market.

They confirmed Saudi Arabia’s willingness to temporarily freeze production for the period starting from October 1, which does not mean preventing states from investing in production capacity, and it does not constitute stakes of final production that are used in the future as a basis for self-producing states, but it is a temporary arrangement for a year that would help the market to regain its balance and remove surplus, as Nigeria, Libya and Iran have the right, in this scenario, to produce with full capacity that is realized until next August, reaching over 5.3 to 6.3 million barrels per day by Iran, 8.1 to 3.2 million by Nigeria, and 390.000 by Libya. This means removing 700.000 to one million barrels per day of excess of supply in the market for a period of one year.