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Russia and OPEC are by all appearances seeing eye-to-eye on the the global oil market. On Thursday, OPEC’s Secretary-General met with Russia’s top energy official to discuss the current state of the oil market. Here are 5 takeaways from the meeting.
1. OPEC’s Production Will Remain Unchanged
OPEC Secretary General Abdalla Salem Al-Badri said Thursday that oil prices will fall no lower, due to a surge in demand and slowing production. Speaking after a meeting with Russian Energy Minister Alexander Novak, Al-Badri reiterated that the 12-member group is not going to cut crude output.
“At the last meeting, in June, we agreed that we will not reduce production quotas. It is 30 million barrels a day, and will remain so,” he said.
2. Signs Of More Stability Next Year
“We believe that oil as a whole will remain one of the main energy resources, though the increase in consumption will be slower than the growth in the world economy as a whole…According to our assessments, the demand for oil will grow from 7 to 11 percent up to 2020, and by 2040 will increase by 15 to 20 percent,” Novak said.
The Russian Energy Minister said that the situation in the oil market will improve next year, as OPEC and Russia share the same views on many issues.
“Despite continuing uncertainties, there are possible signs of achieving a more balanced situation in the oil market and to stabilize it by 2016, which is a mandatory requirement for the continuity of timely and sufficient investments,” a joint statement released after the meeting said.
3. Balance Of Supply & Demand Must Be Brought In Line By The Market
Novak said Russia’s pricing policy and OPEC oil production cuts were not discussed at the meeting with El-Badri.
“A number of countries do not want to do this, so OPEC decided to maintain the production volume. The balance of supply and demand must be brought into line by the market,” Novak said.
4. No China Fears
Al-Badri said OPEC does not fear decreasing demand from China, the world’s top energy consumer. “China has a problem with oil reserves, there is some speculation there. But their economy is growing,” he said.
The next meeting between OPEC and Russia could take place in Vienna in 2H16, the ministers said.
5. What About Iran?
Al-Badri, speaking to the Iran nuclear deal, said the global market will be able to deal with the volume of oil that will come from Iran after the easing of sanctions. “We will certainly be able to accept the new amount,” he said.
He added that OPEC welcomed the lifting of sanctions against the Islamic Republic.
“The global oil market is being affected by various political factors. In particular… the agreement on Iran … and its consequences … will have an impact on the market,” Alexander Novak said.
“Therefore we, Russia and OPEC members, being responsible participants on the global oil market, should conduct our policy based on the full … understanding of its basic factors and characteristics. Here we are pursuing the common goals of keeping the market in a balanced and stable state,” he added.(source: Oilprice.com)