OPEC should cut crude oil output, says Algeria

29 December 2014, Lagos – As the drop in the price of crude oil bites harder on exporting countries, Algeria on Sunday insisted that the Organisation of Petroleum Exporting Countries (OPEC) should cut production to push oil prices up.

Algerian Minister of Energy, Mr. Youcef Yousfi, was quoted by the country’s official APS news agency as saying that his country did not share the views of big producers inside the cartel, who prefer to let the market regulate prices.

OPEC headquarters

OPEC headquarters

“We believe that OPEC should defend the interests of its members by cutting output so prices will go up,” Yousfi said.

“We do not share the views of big producers inside OPEC who say the market can regulate the prices,” he added.

The decision of OPEC not to cut crude oil production to curb the glut in the market has continued to take its toll on the price of the commodity as the price of Brent dropped from $115 per barrel in June to $59.45 at the weekend, on predictions that excess supply would keep building until 2015.

At a meeting last month, top oil exporter, Saudi Arabia, resisted calls from poorer members of the OPEC to reduce production, driving a further slide in prices, which have lost more than 40 per cent since June.

Saudi Arabia’s Oil Minister told fellow OPEC members to combat shale oil boom, arguing against cutting crude output in order to depress prices and undermine the profitability of North American producers.

Ali al-Naimi was said to have won the argument at the meeting, against the wishes of ministers from OPEC’s poorer members such as Venezuela, Iran and Algeria which had wanted to cut production to reverse a rapid fall in oil prices.

The poorer members, who were however not prepared to offer big cuts themselves, yielded to Naimi’s pressure to avoid a clash with the Saudis and their rich Gulf allies.

Naimi reportedly spoke about market share rivalry with the United States, making those who wanted a cut to understand that there was no option to achieve it because the Saudis want a market share battle.

OPEC’s Secretary General, Abdullah al-Badri, also confirmed that OPEC was entering a battle for market share.

In a communiqué at the end of the meeting, OPEC said it reviewed the oil market outlook, as presented by the Secretary General, in particular supply/demand projections for the first, second, third and fourth quarters of 2015, with emphasis on the first half of the year.

Analysts had expected OPEC to cut output by about one million barrels per day but the cartel maintained its production level of 30 million barrels per day.



– This Day

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