Energy Stocks To Watch Ahead Of OPEC Meetings

Lloyd Doyle
June 22, 2018

An authoritative OPEC source disclosed in a telephone interview with Vanguard, yesterday, that while Saudi Arabia has openly canvassed for a huge increase in supply, Iran said it would compromise on a small increase in OPEC oil output.

Oil prices fell on Thursday as crude exporters in Opec appeared to be nearing a deal to increase production. The talks, held as the cartel hosted an worldwide energy conference attended by hundreds of officials, executives and investors, will shape oil prices, energy stocks and currencies of petroleum-exporting countries for months to come.

That would effectively mean a modest boost from producers such as Saudi Arabia that has been cutting more deeply than planned despite production outages in Venezuela and Libya.

Former Exxon Arabian Gulf President Jerry Bailey on the reports that China may stop purchasing USA oil. The proposal has yet to win the backing of all OPEC members, and may also meet resistance from Venezuela, Algeria or Iraq - nations which have limited scope to increase production.

Index provider MSCI said late on Wednesday it would reclassify Argentina and Saudi Arabia as emerging market countries next year, broadening the investor base for both countries.

Analysts expect the group will consider an increase of somewhere around 1 million barrels a day.

Trump's involvement in pressing for OPEC to act - which in addition to his tweets include a behind-the-scenes request for a 1 million-barrel-a-day supply hike - could make it hard for Tehran to accept a compromise.

"Consumers are asking for more supply in the second half", said Saudi Arabia's Al-Falih.

A decision to increase output could be taken even with Iran refusing to sign up, as has happened before in OPEC. Iran faces constraints on its oil exports after Trump reimposed sanctions on May 8. In the long run, tariffs and trade wars threaten not only global trade but also economic growth and global oil demand growth. OPEC is meeting, and it is mulling over the idea of increasing output.

Brent oil clocked a session high of $74.21 earlier today and was last seen trading at $74.00 - up 1.25 percent on the day.

Trump's involvement makes it hard for Tehran to accept a compromise.

OPEC source also said that pressure for increased output was also coming from some non-OPEC members, especially Russian Federation, now supporting the position of Saudi Arabia. OPEC, he said, "is not an organization to receive the instruction from President Trump and follow it". Riyadh could also act unilaterally boosting output, as it did in 2011 after a meeting ended in acrimony without a deal.

"OPEC is listening to consumers", Bob Dudley, the chief executive of BP Plc, said on the sidelines of the OPEC conference in Vienna.

With assistance from Annmarie Hordern, Manus Cranny, Nayla Razzouk, Salma El Wardany, Laura Hurst, Julian Lee, Elena Mazneva, Francois de Beaupuy and Golnar Motevalli.

Other reports by Iphone Fresh

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