Is OPEC beginning to panic?

The Organisation of Petroleum Exporting Countries (OPEC) in an editorial in its latest Bulletin said that it is “ready to talk to all other producers” though it emphasized that this had to be on “a level playing field.”

Igor Sechin, the chief executive of Russian oil major Rosneft said that the Golden Age of OPEC countries to keep oil markets balanced passed when the group decided not to cut production in November last year to end a price rout.

“If quotas had been observed, global oil markets would have been rebalanced by now,” he added, referring to OPEC’s decision in November 2014 to keep production near record highs in defence of market share over prices.

Oil prices have fallen to below $50 per barrel since June 2014 as record global output has started to outweigh consumption. Sechin said an average oil price of $70 dollar per barrel was needed to rebalance global oil markets.

The slide in prices was due to abundant supplies and a policy change by producer group OPEC to defend market share and discourage competing supply from rival producers, rather than cut its own output. Saudi Arabia and its Gulf allies led the policy shift.

Recently, prices lurched to a more than six-year low near $42 a barrel due to concern about the world’s largest energy consumer China’s economy and the persistent oil glut. The latest fall has intensified calls by some members of the Organization of Petroleum Exporting Countries (OPEC) for an emergency meeting. Top Gulf OPEC producers’ policymakers have remained publicly silent since it met last in June.

Gulf oil ministers to meet

Gulf oil ministers are due to meet this week in Qatar for an annual meeting, in the first gathering by the heavyweight crude producers since the latest slide in oil prices.

But while the price drop is not on the agenda for the scheduled meeting of the six-nation Gulf Cooperation Council (GCC);Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman, it will be a chance for oil ministers to air views on the market.

Comments by Ali al-Naimi, Saudi Arabia Oil Minister will be closely scrutinized. The oil minister of the world’s top crude exporter has made no public comment on prices since June 18, when the oil price was above $63 and he said he was optimistic about the market in coming months.

“The Doha meeting is central given what the international petroleum industry is going through from volatility and to push towards stability,” Kuwait’s oil ministry tweeted in a statement.

The ministry’s statement did not say crude prices would be discussed during the ministerial meeting where topics such as unifying domestic gasoline prices, climate change and cooperation in renewable energy sector are on the official agenda.

Venezuelan President Nicolas Maduro said on Saturday he had suggested to the Emir of Qatar a summit of heads of state of OPEC countries to defend oil prices.

Last year, the GCC oil ministers held their meeting in Kuwait. Oil prices were trading then at slightly below $100 a barrel, a level which had long been favoured by OPEC members before last year’s policy shift.

$60 per barrel not expected until 2018

Norway’s official statistics organisation, Statistics Norway, has predicted that oil prices are set to remain low and only gradually increase to around US$60 in 2018. The organization said that low spending will also result in a drop in investment of almost 33 percent from 2013 to 2018.

The past year has seen the Norwegian economy experience an oil-driven economic downturn, due to the low oil prices, which has slowed investment.

“High cost growth meant that petroleum investments started to decline before the fall in oil prices, falling by 15% from the peak in Q3 2013 to Q2 2015,” it says.

“The low oil prices mean that few potential new development projects are profitable, while investment projects related to existing fields can help to curb the fall in investment. As an annual average, we now assume that the investments will fall by almost 12 percent this year, and that the decline will gradually decrease in the years ahead to 5.5 percent in 2018. This implies a drop of almost 33 percent from 2013 to 2018.”

Last week, the organization said invest in oil and gas projects in 2015 was expected to be down 15.1 percent. It also lowered its 2016 investment estimates to NOK181.2 billion – a 2 percent reduction on its previous 2016 estimate. However, expected investment for 2015 was increased by 1.5 percent, as a result of a number of exploration wells being brought forward into 2015, from 2016. But, overall 2015 investment is still expected to be 15.1 percent lower than spending in 2014.

FRANK UZUEGBUNAM