With the global economy reeling from plunging oil prices
occasioned by massive over production, Nigeria, a key member of the Organisation
of Petroleum Exporting Countries (OPEC), which depends hugely on oil revenue
for its foreign exchange, has requested an emergency meeting to discuss steps
to possibly cut down oil production and prop up oil prices.
But Nigeria’s call has been opposed by Iran, another
prominent OPEC member, which claimed that the time is not yet right for such an
intervention.
Minister of state for petroleum resources, Dr Ibe
Kachikwu, made the call for an OPEC emergency while speaking at a panel session
at the ongoing World Economic Forum at Davos, Switzerland, adding Nigeria’s
voice to those of OPEC members, such as Venezuela, that are requesting an
emergency meeting of the oil-producing nations to address the current oil
crisis.
Speaking at the session, Kachikwu stated that with the
oil industry in its current state, the members of the OPEC, which produce about
one-third of the world’s oil, needed to do something proactive soon.
He said, “There is a lot of energy around trying to meet
earlier. Obviously, some of that is a panic reaction. Do we just sit back and
watch? Or do we put more efforts in talking to countries, like Russia, to try
to get some consensus of what we need to be doing?”
However, Iran disagreed with the premise of an emergency
meeting as the country’s oil minister, Bijan Zanganeh, stated that the
organisation currently has little intention of making a drastic change.
“There should be an intention to make a firm decision in
such a meeting; otherwise, the meeting will have negative impacts on world oil
markets. The important thing is that there must be an intention for change, but
we have not yet received such a signal,” the oil minister said, according to
Reuters.
As the global economy heads for what is potentially a
very volatile year, analysts have said that OPEC, which requires a consensus
from all its members before it initiates a change, has to make a decision very
soon.
Following the crash of oil price from an average of $114
a barrel in 2014 to less than $30 a barrel presently, Nigeria’s economy, as
well as those of many other oil-dependent countries, has had an economic
depreciation. Nigeria’s budget is benchmarked at $38 per barrel of oil as the
country needs oil price to rally to fund its budget.
Some OPEC members such as Venezuela had called for
emergency meeting but others such as Saudi Arabia, said to have an eye on the
happenings in Iran as regards oil production, is yet to make a categorical
statement on the matter.
There’s No Tension Between Iran and Saudi Arabia –
Koozechi
Following the ongoing rift between two Middle East heavy
weights, Iran and Saudi Arabia, over the execution of Iran’s top cleric, Sheikh
Nimr Al Nimr, the Iranian ambassador to Nigeria, His Excellency Saeed Koozechi
has said that there’s no tension as such between both countries.
Speaking in an exclusive interview with LEADERSHIP, the
envoy stated that even though Iran was very unhappy with Al Nimr’s execution by
Saudi Arabia, both countries are not having a regional conflict.
He also stated that the Islamic Republic of Iran also
regretted the burning of the Saudi Embassy in Tehran, saying some hoodlums took
advantage of the situation by taking the laws into their hands.
“We condemn the unfortunate situation in very strong terms
and we are happy that the police was able to put the situation under control
and no Saudi diplomat was injured in the incident.
“In fact, over 60 arrests have been made while the matter
is being investigated and the culprits will soon be charged to court’’, he
added.
On how the country is taking the severing of links by
Saudi and some other countries with Iran, he said it is regrettable that Saudi
Arabia was too quick in reacting the way it did, adding that it was proactive
and also encouraged other countries to do same.
Koozechi said he expected Saudi Arabia to have been more
thoughtful and logical about the issue, instead of trying to overshadow their
wrong doing.
He said that although the executed cleric was a reformist
and a critic of some of Saudi Arabian government’s policies, he never did
anything to counter the security of the country to warrant the treatment meted
out to him.
He recalled that Al Nimr was arrested four years ago and
was until his execution in detention, stating that the Iranian government was
not aware if he had the services of a lawyer to defend him in court before his
execution.
Oil falls 3% on swelling oversupply
Oil prices fell three per cent yesterday as Iraq
announced record-high oil production, feeding into a heavily over-supplied
market.
Iraq’s oil ministry said oil output had reached a record
high in December. Its fields in the central and southern regions produced as
much as 4.13 million barrels a day, the government said.
The oversupply has wiped out much of the gains made in
one of the biggest-ever daily rallies last week. Brent crude, the global
benchmark, was down 83 cents at $31.35 a barrel at 1247 GMT, losing 2.6 per
cent from its closing price on Friday, when Brent surged 10 per cent. U.S.
crude traded 85 cents lower at $31.34 a barrel. A senior Iraqi oil official
said the country might raise output even further this year.
“The news that Iraq has probably hit another record
builds on the oversupply sentiment,” said Hans van Cleef, senior energy
economist at ABN Amro in Amsterdam.
“The oversupply will keep markets depressed and prices
low, and on the other hand short positions are in excessive territory.”
The closing of large amounts of short positions had
caused a huge rally on Friday that was largely undone again on Monday, creating
huge volatility in the oil market.
In a sign that investors expect oil prices to rebound,
data from Intercontinental Exchange showed speculators raised net positions of
Brent crude in the week ending January 19. Fundamental factors remained
bearish. Indonesia’s OPEC governor said support among the Organisation of the
Petroleum Exporting Countries (OPEC) for taking steps to prop up crude prices
is slim. The governor said only one OPEC country supported an emergency meeting
over the matter.
Striking a more bullish tone, the group’s Secretary-General
Abdullah al-Badri said at a separate event in London that he saw some signs the
market was rebalancing. He also said OPEC and non-OPEC producers needed to work
together to tackle oversupply in order to prop up oil prices. The chairman of
Saudi’s Aramco said on the sidelines of a different conference on Monday that
oil prices would ultimately balance at a moderate level as demand continued to
rise. In the U.S., one of OPEC’s largest production rivals, a further drop in
the number of oil rigs was expected to weigh on output. U.S. investment bank
Goldman Sachs said it expected production to decline by 95,000 barrels per day
in 2016, including well deferrals, higher than previously assumed.
OPEC Sec-Gen Urges Non-OPEC To Help Clear Oil Stocks
Overhang
OPEC and non-OPEC oil producers need to jointly tackle
global stocks overhang to enable oil prices recover with investments in new
fields, OPEC secretary-general, Abdullah al-Badri, said yesterday.
“It is vital the market addresses the issue of the stock
overhang. As you can see from previous cycles, once this overhang starts
falling, then prices start to rise,” he told a conference in London.
“Given how this developed, it should be viewed as
something OPEC and non-OPEC tackle together. Yes, OPEC provided some of the
additional supply last year, but the majority of this has come from non-OPEC
countries,” he noted. He said it was crucial that major producers came up with
a solution, as the market needed to see inventories come down to levels that
would allow prices to recover and encourage investments. “The current
environment is putting this future at risk. At current price levels, it is
clear that not all of the necessary future investment is viable,” he said.
Source: http://government.leadership.ng/news/495048/nigeria-iran-clash-opec-emergency-meeting
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