OPEC members are nearing a deal to stabilize the crude oil market, Venezuelan President Nicolas Maduro said on the sidelines of a meeting of the Non-Aligned Movement on Sunday. Maduro made the announcement after holding “positive discussions” with Iranian President Hassan Rouhani and Ecuadorian President Rafael Correa. He expects an agreement to be reached as early as this month. The prospect of a cap on output has sent crude oil rallying close to 2.00% in early Monday trade. Prices have been trending under $50.00 a barrel for over two years amid the global supply glut. Leaders from all the 14 OPEC member states, as well as the Russian Energy Minister, are scheduled to hold informal talks on the state of the market in Algiers on September 27. According to comments from Secretary General Mohammed Barkindo reported by Algeria’s official news agency, if the ministers reach a consensus, OPEC may call an extraordinary meeting.
Investor concerns over rising supplies continues to be an overhang on sentiment. Exports from third biggest OPEC member Iran surged 15.00% in August. Furthermore, US drillers have been relentlessly adding to oil rigs, with the September 16th total rig count of 416 coinciding with the most since February. The initiative from the Venezuelan President is not surprising considering the country is among the most economically vulnerable of the group of oil exporters. Venezuela has been lobbying for a deal to freeze output ever since the near vertical crash in prices in 2014. The incessant glut has severely battered its state-run oil economy, and the situation worsened after prices fell below the $30.00 a barrel mark earlier in the year. With Iranian President Rouhani yesterday hinting at a softening of their stance, the likelihood of a deal materializing in the near future has improved markedly.
OPEC Nearing Deal to Stabilize Oil Supply
Market Trends - 19/09/2016