David Kirkpatrick

March 11, 2009

OPEC’s production cuts — working?

Filed under: Business — Tags: , , , — David Kirkpatrick @ 2:08 pm

Maybe, maybe not. Oil was heading up, but took a hit today. I’m guessing OPEC has very little real teeth right now for whatever reason. If you believe some of the industry analysts, it looks like compliance within member nations of the cartel for the production cuts isn’t so great.

Here’s my latest post at EnerMax covering this very subject.

From the link:

One area of concern for OPEC, and of interest to petroleum sector analysts, is the level of compliance with the new, lower production quotas among OPEC nations. One analyst says, “OPEC is still having trouble meeting current quotas,” and that cheating remains a problem for OPEC. Qatar’s oil minister, Abdullah Bin Hamad al Attiyah, says he is satisfied with compliance describing the commitment among OPEC nations for the production cuts as, “very good.” This sentiment was echoed by Iran’s OPEC governor Mohammed Ali Khatibi who says, “Adherence is better than everybody expected, 80 percent, 90 percent.”

Khatibi adds, “Up to 2030, we have to build capacity for 45 million barrels a day, just for compensating the (natural) decline. In addition to that, we need to respond to future demand. The current price cannot encourage any investment, everybody expects a better price. The question is how we can achieve this.”

This confidence from OPEC members is not shared by petroleum industry analysts. One analyst says the rally in the price of oil and OPEC influence is “overdone.” The analyst continues, “OPEC is still having trouble meeting current quotas and cheating remains an issue.”

Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: