OPEC oil production freeze talks to be held on September 28

Almaty. September 27. Silkroadnews – OPEC oil production freeze talks will be held on September 28, Ibe Kachikwu, Nigerian Oil Minister, told the reporters on Monday.

As it was reported, on September 26-28 Algeria will hold the International Energy Forum, within which the oil-exporting countries will also have the oil production freeze talks.

Earlier, at the April meeting in Doha, the negotiations failed as on the eve of the meeting Iran has refused to participate in the talks referring to the international sanctions as recently removed. That time Iranian Oil Minister Bijan Namdar Zangeneh said his country would consider the feasibility of participation in such discussions only when reaches pre-sanctions 4-million bpd crude output.

Russian Energy Minister Alexander Novak noted earlier there are, though they cannot be called a «hundred per cent», still the chances for the oil-exporting countries to reach the production level arrangement. With this the current volumes of Iran oil output contribute to oil freeze arrangement to be achieved.

Meanwhile, the Bank of America announced the meaninglessness of a price war in the oil market.

«Price wars, led by OPEC and the US to bring down the prices of raw materials on the world market, have lost relevance, said analysts of Bank of America Merrill Lynch. There are too less benefits of increasing production for the cartel. BofAML's research concludes that now impact of low prices on oil demand is not as significant as it used to be», RBC quotes the statement by the BofA.

According to the bank's analysts, if average price remains at $50 per barrel over the next 15 years, demand for oil during this period will increase by 11.8 million bpd. Average price of $65 will raise the bar to 10.2 million barrels.
Thus, a difference of $15 gives an increase in demand of 1.7 million bpd on the horizon in 15 years, or only 110 thousand bpd for a year. This means there is no sense for OPEC to increase oil production significantly, BofAML experts believe.

«OPEC countries have boosted production up in the past two years, and expanded the world oil market share from 33% to 35%. This, on a par with decline in oil prices, has dramatically reduced oil production in the US. In particular, in May 2016 number of operating drilling rigs, according to Baker Huges estimates, fell to a record low – 404 units», analysts remind.

With this, BofAML notes, two years of price wars put OPEC in a difficult position. Budgets of state corporations from the oil cartel's key countries have shrunk by 23% from 2014 to 2016. This, in turn, led to generous flows of money in development of new deposits. As predicted by BofAML, the world supply of oil both from the cartel countries and other exporters will fall sharply in the coming years. According to the investment bank analysts, it will be more profitable for OPEC not to intensify investment in high production levels.