Technical & Fundamental Oil Reports Specialists

Follow us

An imaginary OPEC emergency meeting — Friday January 15 2016

Published Friday, January 15th, 2016

Chairman’s introduction:- Gentlemen, we are meeting in emergency session because of the collapse of oil prices below $35 bbl and to discuss what action, if any, we should take. The facts are that the oil price has fallen from $116 bbl in June 2014 to $30 bbl today. As measured by our own basket price there has been a fall of $79 bbl. On a like for like volume basis the group’s revenues have fallen from $3.2 billion to $847 million per day. The volume increase of 2 mbpd to 31.75 mbpd has only moderated the fall by $55 million per day. Several of our members face severe hardship from the revenue fall and have not been able to compensate by participating in the production increase. I now open the meeting up for members to express their views on how OPEC should respond to this very serious situation:-

Venezuela — the answer is clear. We must cut production and adhere to our previously agreed group quota of 30 mbpd, excluding Indonesia

Saudi Arabia — is that 30 mbpd + an additional 1 mbpd from Iran?

Venezuela — yes. The 30 mbpd base level should be allocated as per member production levels going into the meeting held at the end of November 2014 when a market share rather than price support strategy was adopted.

Libya — we cannot agree to that. Our production in November 2014 was only 640,000 bpd when we were in the midst of a civil war. There must be an allowance for us to return to our ‘normal’ production level of 1.5 mbpd.

to read the rest of the report, please click here

Posted by David Hufton