Oil prices are suffering from recent contradictions in OPEC and the strengthening USD. This October push oil higher $50 per barrel awakening hopes for the stable market. The hopemaker's part was performed by Saudis. In late September several OPEC members sighed with relief and Russians agreed not to spoil a deal when Riyadh had offered a new freeze or a cutof production. A month later the effect of the performance paled because a proportion of the future cutoff has been estimated for the group members, and nobody likes the proportion. The main troublemakers are Iraq, a new rebel against Saudi authority, and Machiavellian Iranians as well. Besides Baghdad and Tehran, Moscow is sending ambivalent signals. Manifesting willingness, Russians hold on their strategy to get as much as possible from pumping. Furthermore, a new producer from Kazakhstan joined the club; Caspian Pipeline Consortium sent 194 245 barrels for export. A small amount to be impressed by, but it is a wave against the cutoff trend.
IraqBaghdad pretends to get immunity from the cut off / freeze deal as a ‘special’ member. Iran, Libya, and Nigeria organized a queue, displaying reasons to expand oil export. Iraq is staying at September level. The head of the State Oil Marketing Organization insists on high numbers because the country lost the temp and chances to produce 9 million barrels daily during the wars; thus, the time comes to reach the target. Actually, Riyadh has been expecting the rebel after the meeting in Algeria. The soil for the agreement was very poor, and at the moment the ground slipping under Saudis feet. They need to bear on their shoulders the cutoff / freeze, only the closest aliens to believe in.
IranTehran is performing a script of its own. Iranians have reached the targeted level of almost 4 million barrels per day, in September they used to produce 3.6 million barrels. However, the Islamic republic becomes greedy to pump to the level 4,2 million barrels daily. ‘Mutual love’ between Tehran and Riyadh provokes doubts in the happy end of the deal. Both of them are looking for the money in the time of cholera on the commodities markets. Iran is motivated also by the threat of returning sanctions in case the country will get caught working on the nuclear weapon. The U.S. authorities just put the question on hold until a new administration will settle into the White House, Bloomberg said. Therefore, Tehran is short in time and cash as well.
RussiaRussia dreams to strengthen its power on the global markets. The Kremlin plays muscles in Syria to get back respect gone with the wind of refreshing Soviet ideals and pressing the oil market. Ruia brothers from India agreed to sell their refinery unit to Rossneft, 98% stakes of the unit. Moscow secures an outlet of oil production, investing overseas into refineries. Last Sunday Russians took part in the negotiations with Saudis, but we have no keys regarding the results. Both of the negotiators are silent.
Saudi Arabia Riyadh needs to choose the strategy: to cut off by themselves with their Persian Gulf friends to reach the targeted decrease of output 700000 barrels daily. Saudis will cut output by 400000 barrels, U.A.E. – by 100000 barrels, but who else will join the program? The task is difficult to solve. Meanwhile, the prices are trembling around $50 per barrel under the pressure of uncertainty and strong USD.
November will clarity the landscape: a new president in the White House and OPEC meeting in Vienna.
We are looking forward.