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Venezuela's call for emergency OPEC meet gets doubtful response
January 20, 2016 / 1:58 PM / 2 years ago

Venezuela's call for emergency OPEC meet gets doubtful response

LONDON (Reuters) - Venezuela has requested that OPEC hold an emergency meeting to discuss steps to prop up oil prices, which have fallen to their lowest since 2003, two OPEC sources said on Wednesday.

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015.. REUTERS/Heinz-Peter Bader

But four other delegates from countries in the Organization of the Petroleum Exporting Countries said such a meeting was unlikely to happen. OPEC’s Gulf members including Saudi Arabia have opposed earlier calls for emergency meetings.

“Venezuela has requested an extraordinary meeting,” said an OPEC delegate from a Middle East member-country. Another OPEC source confirmed that such a request had been made.

Oil prices have collapsed to below $28 a barrel, their lowest since 2003, on a supply glut that may worsen this year with the lifting of sanctions on Iran. The decline is painful for all producers and particularly so for less wealthy OPEC members such as Venezuela.

Saudi Arabia and its Gulf OPEC allies led a change in OPEC policy in 2014 to defend market share against higher-cost rivals, rather than cut supply to support prices. OPEC at its last meeting, held in December, rolled over that strategy.

OPEC is already pumping oil at close to record levels, even before any extra Iranian crude reaches the market. The next scheduled OPEC meeting is not until June.

The group’s statutes say support from a simple majority of the 13 members can trigger an extraordinary meeting. But delegates say that in practice, none will occur without support from Saudi Arabia and other top producers.

“There is no change in the Gulf coun‎tries’ position with their market share strategy,” said an OPEC delegate. “Also none of the non-OPEC (countries) show they are willing to cooperate with OPEC for a cut. Iran also still didn’t add (extra) oil to the market. So things didn’t change.”

Another delegate, from one of OPEC’s larger producers in the Middle East, did not expect the drop in prices to be prolonged as current prices challenge the economics of pumping oil outside low-cost OPEC countries.

“It will not be low for a very long time,” he said. “If the price does fall to $20, many producers will leave the market.”

The last extraordinary meeting to discuss a price slump, in 2008, resulted in OPEC making its largest-ever production cut, paving the way for prices to double within a year.

Editing by Susan Thomas and David Evans

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