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It is \u201cstriking\u201d that Iraq has made strong negative comments about OPEC+ production quotas ahead of the alliance\u2019s meeting this week, one oil watcher said.<\/p>\n
The group is expected to\u00a0consider delaying its output increase, scheduled for January 2021, at its two-day meeting starting Monday.<\/p>\n
\u201cA couple of weeks ago, we were all thinking this was going to be a pretty routine meeting, it seemed like all the ducks were lined up in a row for a rollover of these \u2026 cuts,\u201d said Herman Wang, S&P Global Platts\u2019 Middle East and OPEC managing editor. \u201cBut now, we\u2019re seeing some cracks in the foundation,\u201d he said.<\/p>\n<\/div>\n
\u201cWe know that Iraq has long struggled with its quota, but them saying that they are tired of the one-size-fits-all approach, that\u2019s quite striking, for them to say something that direct about OPEC\u2019s management,\u201d he told \u201cCapital Connection\u201d\u00a0on Monday.<\/p>\n
Wang said it\u2019s not unusual for there to be some \u201cperformance theater\u201d ahead of such meetings, but that the \u201cthe stridence of some of these calls\u201d was surprising.<\/p>\n
\u201cA lot of dissatisfaction, a lot of fatigue among a lot of members with having put in these cuts for so long because of Covid,\u201d he said. \u201cAnd with these vaccines perhaps around the corner, some of these countries aren\u2019t willing to maybe play ball for much longer.\u201d<\/p>\n<\/div>\n
Asked if this was a real threat or just a negotiating tool, Wang said it\u2019s a bit of both. \u201cThere\u2019s no imminent split, I don\u2019t think, just based on what I\u2019m hearing,\u201d he said.<\/p>\n
In a statement to Reuters, the UAE energy minister Suhail al-Mazrouei said the country is a\u00a0\u201creliable\u201d member of the alliance.<\/p>\n
Still, there are difficult questions being asked about the future of OPEC. \u201cThat\u2019s what\u2019s partly making these talks just so contentious. It\u2019s not just about the next three months, it\u2019s really about the rest of the decade,\u201d Wang said.<\/p>\n
The UAE has ambitious production targets and doesn\u2019t want to be limited by OPEC+ output cuts, he said, adding that the question now is whether other members want to keep the alliance going.<\/p>\n
\u201cThere\u2019s a case to be made for Saudi Arabia \u2013 they want higher oil prices, they see the need for collective action,\u201d Wang said. \u201cRussia sees an advantage in maintaining these ties with OPEC+ and keeping these oil prices supported in the here and now. Is that still going to be the case 6 months from now, I don\u2019t know.\u201d<\/p>\n
\u201cI think these are tough questions that need to be asked, some discussions that are going on,\u201d he said. \u201cThat\u2019s really what\u2019s coloring these talks and something we\u2019re watching for.\u201d<\/p>\n
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