Iran and Venezuela lead calls for cuts in production within Opec
Carl Mortished, World Business Editor , The Times, 10 Mar 2009Pressure is increasing on Opec to announce a further cut in oil supplies when the cartel meets in Vienna on Sunday, but Saudi Arabia is likely to argue for more compliance with existing cuts before it agrees to further reductions in output. ... Read full article
Lately there is more talk about re-establishing a price band or a floor price as alternatives to reducing quotas. These are of course very problematic to agree on, let alone implement.
Sadad Al-Husseini, was the Executive Vice President for Exploration and Production for Saudi AramcoBeyond these there are also the issues of quota adherence. Pronouncements of over 80% adherence by some OPEC ministers sound good but are not consistent with OPEC's own February monthly report. We'll need to see what they report in their March estimate based on external sources.
Meanwhile dry cargo to China in the form of metals is reported to have increased significantly in recent weeks while oil shipping out of the Gulf is down to 16 million bd.
Perhaps the Chinese claim of 8% GDP growth for 2009 is starting to gain traction even though oil exports are marginally down. The global monetary stimuli packages followed by fiscal relaxation in the US (presumed) may improve the demand factor for finished goods and products in the US but we are still looking at a six months minimum lag time.
With Russian and Mexican declines, onshore rig levels at 60% in North America and slow-downs in capacity spending, oil supply capacity is diminishing across the board.
Could all this start lifting prices in late 2009 to clear Iran's desired $65 per barrel?