Venezuela’s Oil Minister Eulogio Del Pino faces an uphill battle persuading Russia and Saudi Arabia to cooperate in cutting oil production amid a supply glut that has pushed prices down more than 30 percent in the past year, according to analysts Robin Mills and Edward Bell.
Concern that U.S. shale producers would benefit from any increase in oil prices following a potential cut is one factor that will keep Saudi Arabia and Russia from agreeing to a reduction in output, according to Mills, chief executive officer of Dubai-based oil consultant Qamar Energy, and Bell, commodities analyst at lender Emirates NBD PJSC. Del Pino will meet Russian Energy Minister Alexander Novak in Moscow Monday before traveling to Qatar, Iran and Saudi Arabia, the world’s largest oil exporter.
Continue reading: Venezuela Tries to Convince Oil Nations to Cut Production
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Commentary by The Secular Jurist: Oil prices, along with many other commodity markets, have plunged in recent years from a combination of weak global demand and increased supplier competition (i.e. OPEC versus North American producers, and clean energy alternatives versus traditional fossil fuels). From a consumer viewpoint, the resulting cheap gasoline prices are welcome; however, this convergence of economic stagnation with volatile markets does not bode well for our collective future.
What Venezuela is doing here by urging OPEC to cut its oil production can be seen as an act of desperation. Desperate acts typically reflect dire circumstances. Even if it succeeds, higher oil prices will only provide incentive for dirty North American suppliers to ramp-up their production again – a turn of events which would hamper our already shaky climate change mitigation efforts. Stay tuned.