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USA supplies of oil exceed demand, while OPEC prepares for next meeting

27 June 2019 [17:51] - TODAY.AZ

By Trend

“The problem in the market is created by the USA, whose supply of oil exceeds the demand; the balance is gone and OPEC member states sometimes have to concede not to make losses,” an OPEC senior official said.

“We at OPEC are not involved in politics, but what we have to do is to stabilize the international oil market," senior press attaché of Organization of Petroleum Exporting Countries Mahid Al-Saigh told Trend referring to the latest struggle between Iran and Saudi Arabia regarding the oil production amount.

In his words, Saudi Arabia appears to have lifted its oil supply by 200,000 bpd to 10.05 million bpd, according to the monthly Reuters survey. “We study the market in terms of supply and demand,” he said adding that OPEC does not have a department or section to deal with political situations.

Referring to the role of OPEC in setting the oil price, he said that OPEC is not involved in pricing. According to him, they provide information about the demand and supply to the ministries of the member states, who then give quotas for the production.

Speaking about rejection to cut output after reaching the agreement at last meeting, he noted that what happens after the meeting including the buyers and volumes of is beyond OPEC’s responsibility.

“We have not seen anything [any increase in production despite reports],” he said. “The countries can decide, but the final decision to be made at the next meeting in July.”

“The market now is very sensitive and many changes can occur, so no one can say what is going to happen. It will depend on the situation on the market and on the decision to be made by the ministers,” he said responding to the question about the next meeting’s outcome.

Referring to the struggle between Iran and Saudi on output selling, he added, “everybody has their say, but the final decision to be applied in the market must be made by the consensus. Any minister can say ‘My country needs to produce 10 million barrels or 2 million barrels’, but the ministers have to agree at the meeting.”

“So many people don’t know about OPEC. They think OPEC makes crisis,” the OPEC official said objecting the way of general perception of the OPEC’s responsibility. “The good thing about OPEC is that all shall agree. It’s not working if Iraq, Iran or Saudi Arabia says they want to produce certain amount of oil,” added Al-Saigh.

He went on to stress that next year OPEC will celebrate its 60th anniversary and that this proves success of the organization. OPEC wants each member country be proud to be a part of it, he said.

“The problem in the market is created by the USA, which provides more supply than demanded, so the balance is gone,” he added. “Sometimes, the member states have to agree, because if they do not agree, OPEC will make losses. There are other countries, which can enter the market.”

“OPEC is a team and we have to work together. If we fight with each other, it will disappear in a couple of years,” he said.

OPEC and its allies, also referred to as “OPEC plus,” are scheduled to meet in Vienna on July 1–2 to decide about extension of production cut. In the meantime, US-Iran tension could escalate after President Trump’s decision to impose new sanctions on Iran. Although analysts don’t believe in war between the US and Iran, they think that the diplomatic fight between the two countries might continue.


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