Oil nations are aiming for output freeze again

August 10, 2016

Many nations can’t afford to freeze output, but oil nations were calling for output freeze again to stop falling oil prices.

Oil nations are aiming for output freeze again

This article is originally referred from iForex News

Oil prices are declining again since mid-June and went below $40 recently. As oil nations must cooperate together if they want to stop falling oil prices, there was a report on last weekend that some oil nations were calling for output freeze again.

oil prices went below $30 in February

This is not the first time in 2016 that oil nations take actions for output freeze. Saudi Arabia, Venezuela, Qatar and Russia agreed in February that they would freeze output at January level.

Those oil nations were supposed to discuss more on the freeze matter and implement it later. But since oil prices turned upward after February and other nations did not agree with this idea, it has never been implemented so far.

Oil prices were falling until mid-February this year and went below $30 at that time for the first time in 13 years. However, the prices turned around and were on uptrend for 4 months between February and June. There were several reasons for the surge. Oil output decreased because prices were too low. There was wildfire in Canada which affected oil production in the country. Rebels were attacking and destroying oil pipelines in Libya.

After coming to the peak in mid-June, oil prices started falling again because the influence of wildfire in Canada was fading way and because oil output was increasing.

Then, Wall Street Journal reported last week that oil nations such as Venezuela, Ecuador and Kuwait would call for cooperation among OPEC nations, aiming for output freeze.

Qatar’s Energy Minister Mohammad bin Saleh al-Sada said this week that OPEC would have an unofficial meeting in September. The meeting will be a good opportunity for nations like Venezuela to call for cooperation.

But it’s not easy for them to cooperate together. Many nations can’t afford to freeze output and decrease revenue now. After oil prices started falling in late 2014, the agenda for every OPEC meeting was whether to freeze output. But oil nations did not reach an agreement at any single time.

Russian Energy Minister Alexander Novak said on Monday that Russia saw no need for renewing discussion of an oil-output freeze at current crude prices. This statement clearly shows that Russia is not willing to freeze output.

For countries like Venezuela which is on the verge of collapse because of low oil prices, it’s a must to push up oil prices again. But it’s no easy task.

Original Source: iForex News

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